Analysis of the impact of raising benefit rates · Analysis of the impact of raising benefit rates...

Analysis of the impact of raising benefit rates

1


Australian Council of Social Service September 2018

Deloitte Access Economics Pty Ltd

ACN 149 633 116

550 Bourke Street

Melbourne, VIC, 3000

Australia

Phone: +61 3 9671 7000

www.deloitte.com.au

The entity named herein is a legally separate and independent entity. In providing this document, the author only acts in the named capacity and does not act in any

other capacity. Nothing in this document, nor any related attachments or communications or services, have any capacity to bind any other entity under the ‘Deloitte’

network of member firms (including those operating in Australia).

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Touche Tohmatsu Limited

4 September 2018

Dr Cassandra Goldie

Chief Executive Officer

Australian Council of Social Service

[email protected]

Dear Cassandra,

Analysis of the impact of raising the rates of Newstart and other allowances rates

This report, commissioned by the Australian Council of Social Service (ACOSS), considers the impact

of boosting a range of allowance payments. The proposed policy change is a ‘catch up increase’ of

$75 a week – an extra $10.71 a day that would be received by around 770,000 Australians receiving

the ‘single rate’ of one of these payments.

Our report finds that the introduction of such a policy would have a range of ‘prosperity effects’,

boosting the size of the economy and the number of people employed in Australia. The latter effect

would result in an additional 12,000 people being in work in 2020-21, though those effects would

then fade over time.

The bigger impacts are ‘fairness effects’.

Our analysis shows that the bulk of the dollars go to the lowest income quintile of households.

Measured in dollar terms, the lowest quintile receives six times the dollars going to the highest

income quintile.

That said, dollars aren’t the best way to assess the impact on fairness. What matters is the relative

impact of those extra dollars on disposable incomes. And, on that measure, the proportionate

impact becomes fully evident. The lowest quintile would receive twenty eight times the relative

boost to its disposable incomes than does the highest income quintile – an increase in income of

1.6% for the lowest quintile, versus 0.06% for the highest quintile.

Accordingly, any given dollar spent on this policy proposal would have a very tightly targeted fairness

impact, with the overwhelming bulk of relative improvements in disposable incomes going to

Australia’s lowest income households.

There is also a relatively tight correlation between the least well-off districts across Australia

(measured using the SEIFA index) and the boost to regional spending from this proposal, meaning

that the regional economies most in need of help would receive it were this proposal to be enacted.

Yours sincerely

David Rumbens

Deloitte Access Economics Pty Ltd

mailto:[email protected]


Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a

legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited

and its member firms.





© 2018 Deloitte Access Economics

Contents

Glossary i

Executive Summary ii

1 Background 1

1.1 The inadequacies of Australian indexation arrangements 1 1.2 For many, being on allowances is far from temporary 3 1.3 Do allowances encourage people to be unemployed? 4 1.4 How many people are on Newstart? 4 1.5 Where do Newstart recipients live? 5 1.6 How old are Newstart recipients? 6 1.7 How long do people stay on Newstart? 6 1.8 Do people work while on Newstart? 7

2 The impact on Australia’s Budget and economy 8

2.1 Estimating the cost to Federal Government coffers 8 2.2 Impacts on the Australian economy 9 2.3 Longer term economic impacts 15 2.4 The ‘who’ and the ‘where’ of beneficiaries would increase the prosperity impact

16 2.5 Social benefits include better health 16 2.6 Direct links between fairness and prosperity 17

3 Fairness impacts 19

3.1 Fair’s fair 19 3.2 Bottom line impacts on disposable incomes 20

4 Regional impacts 23

4.1 Making impacts that matter 23

References 29

Appendix A : LGA outcomes 32

Appendix B : The Horizon Model 50

B.1. The Horizon Model 50

B.1.1. What is the Horizon model? 50 B.1.2. How does the model work? 50 B.1.3. Where does the data come from? 52

Appendix C : Regional CGE modelling methodology 54

C.1. Computable general equilibrium modelling 54

Limitation of our work 55


Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a

legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited

and its member firms.





© 2018 Deloitte Access Economics

General use restriction 55

Charts

Chart i : Increase in household disposable incomes, equivalised quintiles, % iv Chart ii : Increase in regional income per head, mapped against regional SEIFA scores v

: Wage growth relative to price growth since 1994, including forecasts 1 : Average wages, the pension and Newstart over time in 2000-01 $ terms 2 : Dollars per week – the relativities 3 : Share of Newstart and Youth Allowance recipients by time on payment 4 : Estimated cost, $billions 8 : Real GDP, % deviation from baseline 10 : Nominal GDP, % deviation from baseline 10 : Real imports, % deviation from baseline 11 : Real exports, % deviation from baseline 11 : Real housing investment, % deviation from baseline 12 : Real consumer spending, % deviation from baseline 13 : Jobs, % deviation from baseline 13 : Average weekly earnings, % deviation from baseline 14 : Consumer prices, % deviation from baseline 14 : Net cost to the Federal Budget - % of national income 15 : Inequality and growth, percent of GDP and net income inequality, 1960-2010 17 : Inequality and the durability of growth, duration of growth spells, average net

income inequality 1960-2010 18 : Estimates of the progressivity of taxes and transfers 19 : Index of inequality, 2015-16 (private income distribution = 100) 20 : Increase in household disposable incomes, equivalised quintiles, per week 21 : Increase in household disposable incomes, equivalised quintiles, % 22 : Increase in regional disposable income per head, mapped against regional SEIFA

scores 25

Tables

Table 1.1 : Newstart allowance recipients over time 5 Table 1.2 : Newstart recipients by State 5 Table 1.3 : Newstart recipients by ABS Statistical Area 2 (top 20) 6 Table 1.4 : Newstart recipients by age, Dec-17 6 Table 1.5 : Duration on payments 7 Table 1.6 : Earnings from employment in last fortnight (% share), Dec-17 7 Table 4.1 : Outcomes for key economic indicators for the top 20 LGAs affected in per person

terms, change in per person value, 2018-19 23 Table 4.2 : Outcomes for key economic indicators for each State and Territory, Total increase

($m), 2018-19 25 Table A.1 : Outcomes for key economic indicators for each local government area, change in per

person value, 2018-19 32 Table A.2 : Outcomes for key economic indicators for each local government area, Total increase

($m), 2018-19 40 Table A.3 : Outcomes for key economic indicators for each State and Territory, change in per

person value, 2018-19 48 Table A.4 : Outcomes for key economic indicators for each State and Territory, Total increase

($m), 2018-19 49

Figures

Figure 4.1 : Increase in regional disposable income per head for each local government area 24 Figure 4.2 : Increase in regional consumer spending per head for each local government area 27 Figure 4.3 : Increase in regional economic output per head for each local government area 28 Figure C.1 : The components of DAE-RGEM and their relationships 54


i

Glossary

ABS Australian Bureau of Statistics

ACT Australian Capital Territory

CPI Consumer Price Index

DAE Deloitte Access Economics

DAE-RGEM Deloitte Access Economics’ – Regional General Equilibrium Model

Economic growth The expansion of production possibilities

HILDA Household, Income and Labour Dynamics in Australia

Labour force The sum of people who are employed and unemployed

Labour force participation rate

The share of those of working-age population who are in the labour force

LGA Local Government Area

Long term unemployed Persons unemployed for 12 months or longer

Metropolitan Areas that are within capital cities

NSW New South Wales

NT Northern Territory

QLD Queensland

Regional Areas outside of capital cities

Rural The ABS defines rural areas as areas with populations of less than 1,000 people

SA South Australia

SEIFA Socio-Economic Indexes for Areas

Short term unemployed Persons unemployed for less than 12 months

TAS Tasmania

Unemployment rate The percentage of people in the labour force who are unemployed

VIC Victoria

WA Western Australia

Working-age population The total number of civilians aged 15 years and over


ii

Executive Summary

Australia’s aims

Key aims for Australia’s economy and society can be summarised as ‘prosperity and fairness’. These

represent ‘the size of the pie’ and ‘how the pie is sliced up’.

This report, commissioned by the Australian Council of Social Service (ACOSS), considers the impact

on both prosperity and fairness of boosting a range of allowance payments.

The proposed policy change is a ‘catch up increase’ of $75 a week – an extra $10.71 a day for more

than 770,000 people: the least well off in Australian society.1

Australia’s challenge

The gap between the living standards of average Australians and those who are on these allowances

has widened sharply over the past quarter of a century. And it continues to widen.

That wasn’t an accident: it was what policy has been geared to do.

A key driver of average living standards is wages. But these allowances examined in this analysis are

indexed to prices rather than wages. And that’s a problem because, over time, wages grow faster

than prices. Accordingly, the nation’s policy settings ensure that those Australians who are on

allowances have seen their living standards squeezed relative to average living standards.

The impact on Australia’s economy

Lifting these allowances would have both prosperity and fairness impacts.

The fairness impacts dominate, but there are prosperity points to consider too. Deloitte Access

Economics used our Horizon macroeconometric model of the Australian economy to model a lift in

allowances that is effective immediately. The direct cost of the Federal budget is about $3.3 billion a

year:

In nominal dollars, the size of the Australian economy (“the prosperity dividend”) would lift by

some $4.0 billion2 as a result of that extra spending, meaning that the size of the economy initially

increases broadly in line with the initial income injection of $3.3 billion.

That’s because several factors offset. Among the negatives:

– Most notably, some of the extra spending by beneficiaries would be on imports.

– And a modest increase in the value of the Australian dollar would weigh on exports.

– While, similarly, interest rates would also be a little higher than otherwise. Among other

things, that would see fewer new homes being built (as well as less done by way of renovating

old homes).

Among the positives:

– That money goes as extra income to a group that, on average, is the poorest of the poor in

Australia. Other things equal, most of it is therefore spent. So it’s no surprise that the bulk of

the dollars – some $3.3 billion a year – show up as extra spending by consumers.

– And while imports would go up, the bulk of the extra spending by beneficiaries would be spent

at home. That extra spending would create some 12,000 extra jobs. And the accompanying

strength in the market for workers would lift wages. (Prices would also be a little higher, but

the increase in wages would outweigh that in prices.)

1 Deloitte Access Economics has also separately noted the strong case for raising Newstart and Youth Allowance in the latest (May 2018) issue of our Budget Monitor publication, though the specifics of what we proposed differ from those examined here. 2 The results quoted here are the difference in financial year 2020-21 outcomes between two different scenarios: one in which these benefits are raised, and a ‘baseline’ scenario in which the benefits aren’t increased by $75 a week.


iii

– Total wages being paid to Australians would therefore lift by around 0.2%. Similarly, the

stronger economy would boost corporate profits, with that latter boost also running at close to

0.2%.

– Finally, the stronger economy (more jobs, higher wages, stronger profits) would mean that the

Federal Government would raise an extra $1.0 billion in taxes, while State and Territory

Government revenues would increase by some $0.25 billion.

But the boost to the economy would tend to fade over time. That’s because the impact of the

increases to interest rates and exchange rates would gradually rise over time. More importantly

still, this policy change comes at a cost to the Federal Budget, and the modelling assumes that –

over time – taxes lift so that the debt levels of the Australian government return to where they’d

otherwise be.

The combination of those factors – very slight increases in taxes, interest rates and exchange rates

that occur over time – thereby gradually return the Australian economy back closer towards the

path it was otherwise on (the baseline scenario).

As a simple example of the impact of that, the net number of additional jobs created by this

change in policy – which stood at 12,000 extra jobs in 2020-21 – is estimated to slip back to

around 4,400 by 2024-25, and to be less than 500 extra workers by 2029-30.

That fading strength in the “prosperity positives” is no surprise. Some of the gains to the “size of the

pie” are generated by dipping into the Federal Budget to pay for higher allowances. The net cost of

that to Australian taxpayers is gradually clawed back via higher taxes and, as noted, the stronger

economy also shows up in higher interest and exchange rates.

Or, to put that another way, the prosperity benefits fade over time, but the most compelling reasons

to adopt this reform revolve more around fairness than they do around prosperity.

And it is important to note that it is possible that the modelling understates the extent of the

prosperity benefits.

Most notably, it is important that these dollars would flow to the poorest of the poor in Australia.

There is a significant body of evidence that higher incomes for the unemployed and other groups who

are disadvantaged may lead to better national outcomes on indicators such as health. That is, there

are many additional social costs involved with entrenched disadvantage, and those costs are alleviated

as the cycle of disadvantage is broken. It is beyond the scope of this exercise to account for the

reduction in those broader social costs, but there is a growing body of research in this area.

Finally, the economic literature has increasingly identified inequality as a factor that can directly weigh

on prosperity. For example, research by the IMF indicates that:

Nations with greater levels of inequality tend to have lower economic growth over time (in the

language used in this report, failures on fairness can limit success on prosperity); while

The worse is inequality in a nation, then the shorter are its spells of high economic growth.

The upshot is that the results in this report are likely to be conservative: the “prosperity dividend”

could be both larger and longer-lived than these results have it.

The impact on fairness

The two largest fairness levers in Australia are (1) cash benefits and (2) the operation of the education

and health systems. This report considers the impact of potential increases focussed on the

‘unemployment and study payments’ category of cash benefits.

Our analysis shows that the bulk of the dollars go to the lowest income quintile of households.

Measured in dollar terms, the lowest quintile receives six times the dollars going to the highest income

quintile.

That said, dollars aren’t necessarily the best way to assess the impact on fairness. What matters is

the relative impact of those extra dollars on disposable incomes.


iv

And, on that measure, the proportionate impact becomes fully evident. As the chart below shows, the

lowest quintile would receive twenty-eight times the relative boost to its disposable incomes than does

the highest income quintile – an increase in income of 1.6% for the lowest quintile, versus 0.06% for

the highest quintile.

Chart i: Increase in household disposable incomes, equivalised quintiles, %

Source: Deloitte Access Economics, ABS Cat No. 6523.0



Australia’s lowest income families.

That illustrates the fairness strengths of the current proposal.

Regional impacts

The different types of allowances that would be raised have different regional profiles. That said, the

bulk of the impact would be through increased Newstart allowance, and the regional distribution of

those allowances would boost both the prosperity and fairness impacts discussed above.

From a prosperity viewpoint, unemployment in Australia is relatively higher outside our largest cities

and towns. Other things equal, this means that relatively more of the increased spending flowing from

higher allowances would tend to stay in Australia, being spent on locally produced products and local

labour.

0.0%

0.5%

1.0%

1.5%

2.0%

Lowest Second Third Fourth Highest


v

Chart ii: Increase in regional income per head, mapped against regional SEIFA scores

Source: Deloitte Access Economics; ABS.stat database

Note: SEIFA score is based on an index of relative socio-economic advantage and disadvantage. The higher the index

value the more advantaged a region is relative to other regions. Data is from 2016.

From a fairness viewpoint, there is a tight correlation between the least well-off districts across

Australia (measured using the Socio-Economic Indexes for Areas (SEIFA) index) and the boost to

regional income from this proposal, meaning that the regional communities most in need of help would

receive it were this proposal to be enacted.

Deloitte Access Economics

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

500 600 700 800 900 1,000 1,100 1,200 1,300

$ p

er

pers

on

Index of Relative Socio-economic Advantage and Disadvantage

1

1 Background

The material below mostly focusses on Newstart recipients, who make up the bulk of those3 who would

receive the additional payment of $75 a week.

1.1 The inadequacies of Australian indexation arrangements

In brief, the case for lifting a range of allowances paid by the Federal Government – notably including

the Newstart allowance received by the unemployed – is that:

They haven’t risen in line with national living standards for a quarter of a century. That’s because

they are indexed to prices rather than wages. Yet living standards are dominated by wages, and

wages grow faster than prices over time (as workers become better educated, and as companies

invest in better equipment for their workers).

So Newstart has shrunk as a share of:

– average wages,

– median wages,

– the minimum wage, and

– the age pension.

And it is set to shrink even further, given that it continues to be indexed to prices rather than

wages. As a result, and despite being focussed on tax, the Henry Review specifically noted the

collapsing ratio between Newstart and the single rate of age pension.

: Wage growth relative to price growth since 1994, including forecasts

3 Other beneficiaries of the $75 per week increase include single recipients of Youth Allowance (student and apprentice) Youth Allowance (Other) (both away from home rates), Newstart (single parent rate), Austudy, Abstudy, Sickness Allowance, Special Benefit, Widow Allowance.

0%

10%

20%

30%

40%

50%

60%

1994 1998 2002 2006 2010 2014 2018 2022 2026

2

Source: Deloitte Access Economics; ABS Cat No. 6302.0, 6401.0

Let’s step through that in more detail. Chart 1.1 shows that, over time, wages grow faster than

prices. Across the last quarter of a century (the then Federal Government raised unemployment

allowances in 1994), wages have risen 40% faster than prices – a trend that’s set to continue.

Accordingly, if your income rises with prices, but the incomes of the rest of society rise with wages,

then your living standards are set to sink relative to national averages.

This difference in generosity is a policy choice. The incomes of pensioners and most other

beneficiaries are benchmarked to wage growth, but those on working age payments aren’t as lucky.

This has seen a growing divergence between average earnings, the pension and Newstart grow over

time (as may be seen in Chart 1.2).

For example, while the age pension has doubled in real terms since 2000, Newstart has barely budged.

: Average wages, the pension and Newstart over time in 2000-01 $ terms

Source: Commonwealth Treasury; ABS Cat No. 6302.0, 6401.0; Deloitte Access Economics.

Note: series are deflated by the CPI and are in 2000-01 dollars. AWE is average weekly earnings

As Chart 1.3 shows, the resultant relativities are stark. At just $272.90 for a single person each

week4, Newstart is the equivalent to living on $38.99 a day. Even adding in the maximum rent

assistance and the energy supplement, a single person with no children has to live on around $49.24 a

day.

For an Australian under 22, that figure becomes $41.97 a day5. (Unemployed young people under 22

aren’t provided the same level of assistance as those 22 and older, regardless of their living

arrangements and capacity for family support.)

4 As at 20 March 2018 http://guides.dss.gov.au/guide-social-security-law/5/1/8/20 5 This includes the ‘away from home’ maximum basic rate, the full amount of rent assistance and the energy supplement.

$300

$350

$400

$450

$500

$550

$600

$650

$700

$750

$800

2000 2002 2004 2006 2008 2010 2012 2014 2016

AWE Age pension Newstart

http://guides.dss.gov.au/guide-social-security-law/5/1/8/20

3

The end result is that a person on Newstart lives on around 36% of the average wage after tax and a

little more than half of what someone working full-time on the minimum wage6.

For the single age pension these ratios are 54% and 82% respectively.

: Dollars per week – the relativities

Source: Department of Social Services; Fair Work Australia; ABS Cat No. 6302.0; Deloitte Access Economics.

Note: Full-time minimum wage is for a 38 hour week; social security payments include full rent assistance.

All reported income amounts are after personal income tax.

1.2 For many, being on allowances is far from temporary

Benchmarking payments to prices rather than wages would be less of an issue if these payments were

still doing the job that they were designed to do – acting as a stopgap measure to help unemployed

Australians get by while they find paid work. As the Centrelink website states, Newstart allowance is

“the main income support payment while you’re unemployed and looking for work.” It was designed to

supplement other savings which would help unemployed Australians and their families through periods

of unemployment.

Yet a significant number of recipients spend longer and longer on these payments. Chart 1.4 shows

that, for many recipients, being on unemployment allowances is not a temporary state. Nearly half of

Newstart recipients and a quarter of Youth Allowance recipients have been on their respective

payments for at least two years. There are also a number of Youth Allowance recipients who simply

transition from Youth Allowance to Newstart when they turn 22.

6 Based on a 38 week at the 2017-18 minimum wage, after personal income tax.

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Average full-time wage

Averageearnings

Full-timeminimum

wage

Age pension Newstartallowance

Youthallowance

4

: Share of Newstart and Youth Allowance recipients by time on payment

Source: Department of Social Services

1.3 Do allowances encourage people to be unemployed?

It would be nice if unemployment were temporary. But for many it isn’t. And nor is that because

these payments are encouraging people to be ‘dole bludgers’.

To be clear, economists do see the potential for a problem here: if unemployment allowances are

close to the wages that you’d earn in a job, then they could tempt people to choose to stay out of

work.

But that’s almost the opposite of the situation here in Australia.

Australia has:

1. very low Newstart payments, at the same time as we have

2. high wages and, by global standards,

3. high minimum wages compared with other countries in the OECD.

That combination tells you that the underlying causes of long term welfare dependency are a larger

and more complicated policy and societal failure – one that cannot be adequately addressed on these

pages. Yet that doesn’t diminish the point that the existing rate of working age payments are too low.

1.4 How many people are on Newstart?

About 700,000 people. Newstart accounts for about one-twentieth of all DSS payments

(ABSTUDY, the age pension, Austudy, carer payment, disability support pension, Newstart, the

parenting payment, partner allowance, sickness allowance, special benefit, widow allowance and youth

allowance).

A total of 752,430 people were receiving Newstart payments as of December 2017, a 0.9% decrease

from the previous year. Newstart recipients account for 4.8% of total payment recipients – unchanged

since December 2013. Note: In January 2013, there was a large, one-off increase due to the

cessation of the grandfathering provisions for Parenting Payment recipients who had been on the

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Under 1 year 1-<2 years 2-<5 years 5-<10 years 10 years+

Newstart Youth Allowance (other)

5

payment prior to 1 July 2006 and had a youngest child aged 6 years or over (for partnered) or 8 years

(for single). Eligible recipients were transferred to Newstart.

Table 1.1: Newstart allowance recipients over time

Number of Newstart recipients

% growth in Newstart recipients

Newstart recipients as a share of all payment type

recipients

Dec-13 683,386 - 4.8%

Dec-14 727,778 6.5% 5.0%

Dec-15 753,291 3.5% 5.1%

Dec-16 759,292 0.8% 5.2%

Dec-17 752,430 -0.9% 4.8%

Note: all payment types include ABSTUDY, the age pension, Austudy, carer payment, disability support pension, Newstart,

the parenting payment, partner allowance, sickness allowance, special benefit, widow allowance and youth allowance

Source: DSS Payment Demographic Data Dec-13 to Dec-17.

1.5 Where do Newstart recipients live?

In all States and Territories. Relative to their respective populations, you are less likely to be

on Newstart in the ACT, and more likely in the Northern Territory and Tasmania

At December 2017, the States with the highest proportion of Newstart recipients relative to their

populations were the Northern Territory, Tasmania and South Australia.

Table 1.2: Newstart recipients by State

Number of

Newstart recipients

Share of total Australian Newstart

recipients

Share of total Australian population

Newstart share relative to population

share

Australian Capital Territory 6,271 0.8% 1.7% 47%

New South Wales 207,495 27.6% 32.0% 86%

Northern Territory 15,154 2.0% 1.0% 200%

Queensland 171,108 22.7% 20.0% 114%

South Australia 67,982 9.0% 7.0% 129%

Tasmania 22,475 3.0% 2.1% 143%

Victoria 174,154 23.1% 25.7% 90%

Western Australia 87,659 11.7% 10.5% 111%

Unknown 132 0.0% - 47%

Total 752,430 100.0% 100% 3.3

Source: DSS Payment Demographic Data Dec-17.

6

Table 1.3: Newstart recipients by ABS Statistical Area 2 (top 20)

SA2 name State Number of recipients

Share of total Newstart

recipients

Craigieburn - Mickleham Victoria 2,369 0.31%

Corio - Norlane Victoria 2,205 0.29%

Liverpool - Warwick Farm New South Wales 2,142 0.28%

Dandenong Victoria 1,942 0.26%

Fairfield New South Wales 1,887 0.25%

Caboolture Queensland 1,794 0.24%

Mildura Victoria 1,758 0.23%

Balga - Mirrabooka Western Australia 1,694 0.23%

Southport Queensland 1,658 0.22%

Whyalla South Australia 1,658 0.22%

Armadale - Wungong - Brookdale Western Australia 1,642 0.22%

Inala - Richlands Queensland 1,638 0.22%

Berkeley - Warrawong - Windang New South Wales 1,618 0.22%

Cabramatta - Lansvale New South Wales 1,602 0.21%

Werribee Victoria 1,595 0.21%

Salisbury South Australia 1,532 0.20%

Bankstown New South Wales 1,507 0.20%

Davoren Park South Australia 1,499 0.20%

Enfield - Blair Athol South Australia 1,431 0.19%

Epping New South Wales 1,421 0.19%

Source: DSS Payment Demographic Dec-17.

1.6 How old are Newstart recipients?

Newstart is available to those who are over the age of 22 but under pension age. Recipients

aged between 35 and 64 account for more than two-thirds of all Newstart recipients.

Table 1.4: Newstart recipients by age, Dec-17

Number of

Newstart recipients Share of total

21-24 67,086 9%

25-34 158,943 21%

35-44 167,694 22%

45-54 175,306 23%

55-64 172,989 23%

65 and over 10,412 1%

Total 752,430 100%


1.7 How long do people stay on Newstart?

More than one third of Newstart recipients are on the payment for less than one year,

compared to just one in every eight (13%) of recipients across all payment types.

That said, 46% of Newstart recipients are on the payment for more than two years.

7

Table 1.5: Duration on payments

Under 1

year 1 to 2 years

2 to 5 years

5 to 10 years

More than 10 years

Average duration on

payment (weeks)

Newstart

Number of recipients 257,966 144,995 225,871 101,041 22,557 146

% share of total 34% 19% 30% 13% 3%

All payment types

Number of recipients 664,897 505,735 1,045,385 1,091,462 1,625,603 250

% share of total 13% 10% 21% 22% 33%

Note: all payment types include ABSTUDY, the age pension, Austudy, carer payment, disability support pension, Newstart, the

parenting payment, partner allowance, sickness allowance, special benefit, widow allowance and youth allowance


1.8 Do people work while on Newstart?

Almost one fifth of all people receiving Newstart recorded some earnings, compared with less

than 10% of recipients across all payment types.

Table 1.6: Earnings from employment in last fortnight (% share), Dec-17

No earnings

Had earnings

> $0 to < $100

$100 to < $250 $250+

Newstart 80% 20% 4% 14% 82%

All payment types 90% 10% 5% 16% 79%

Note: all payment types include ABSTUDY, the age pension, Austudy, carer payment, disability support pension, Newstart, the

parenting payment, partner allowance, sickness allowance, special benefit, widow allowance and youth allowance


8

2 The impact on Australia’s

Budget and economy

Lifting these allowances would have both prosperity and fairness impacts.

The fairness impacts dominate (and are discussed in the next chapter), but there are prosperity points

to consider too.

Deloitte Access Economics used our Horizon macroeconometric model of the Australian economy

(discussed in Appendix A) to model a lift in allowances that is effective immediately.

2.1 Estimating the cost to Federal Government coffers

We modelled an increase of $75 a week for single recipients of Austudy, Newstart allowance, Sickness

allowance, Special Benefit, Widow Allowance and Youth Allowance (student/apprentice and other,

away from home rates). As at 30 March 20187, there were around 770,000 Australians receiving the

‘single rate’ of one of these payments. The number of payment recipients are projected forward

accounting for changes in the economy and population size/structure.

: Estimated cost, $billions

Source: Deloitte Access Economics estimates

The direct cost of that to Federal coffers is about $3.3 billion a year8. However, some of that – around

a quarter initially – is recovered through an increased tax take due to the larger economy. Over time,

7 Department of Social Services demographics data, March 2018. Available at https://data.gov.au/dataset/dss-payment-demographic-data/resource/c9bcd6ed-b6bd-423b-abc5-86b54bd7a591 8 The analysis assumes that the increase in the payment amount is restricted to single recipients.

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

2018-19 2020-21 2022-23 2024-25 2026-27 2028-29

Direct cost Net cost

$billions

https://data.gov.au/dataset/dss-payment-demographic-data/resource/c9bcd6ed-b6bd-423b-abc5-86b54bd7a591

https://data.gov.au/dataset/dss-payment-demographic-data/resource/c9bcd6ed-b6bd-423b-abc5-86b54bd7a591

9

the net cost to the government declines due to ‘bracket creep’ from increased inflation (discussed

below) offsetting the increase in payment growth due to indexation (Chart 2.1).

Most of the dollar cost associated with policy change comes about from providing each current

recipient with an extra $75 a week. A smaller share of the overall cost is due to the increase in

eligibility as the larger payment makes those who currently earn enough income to be income tested

off the payment become eligible for a part-payment.

2.2 Impacts on the Australian economy

Summary impacts

There are three different ways to measure what’s happening in the Australian economy – the incomes

being earned, the money being spent, and the industries affected.

In brief, and in terms of outcomes in 2020-21, the income effects are broadly similar, with the

national wage bill and corporate profits rising by similar proportions. Within the wage bill, there are

positives coming from both jobs and from wages (measured net of the increase in prices – real wages

are higher).

In relative terms the largest spending increases are in private consumption, but there is also a

smaller positive recorded in business investment. However, there are negatives in imports (that is,

imports go up), exports and housing construction.

By industry, there are modest negatives for sectors affected by the stronger interest rates

(construction) and exchange rates (manufacturing and farming – though mining also doesn’t do well).

That said, all other industries benefit.

The results indicate that the nominal dollar size of the Australian economy (“the prosperity dividend”)

would lift by some $4.0 billion9 as a result of that extra spending, meaning that the size of the

economy initially increases pretty much dollar for dollar alongside the initial income injection of

$3.3 billion.

Part of that increase in nominal GDP simply reflects higher prices, as increased spending in the

economy boosts the CPI as well as real activity. But there is an increase in real GDP as well, as may

be seen in Chart 2.2.

(Note that the charts here are given as ‘deviations from baseline’. That is, they indicate the changes

in economic outcomes in Australia were allowance increases to be enacted.)

9 Unless otherwise noted, the results quoted here are the difference in financial year 2020-21 outcomes between two different scenarios: one in which these benefits are raised, and a ‘baseline’ scenario in which the benefits aren’t increased by $75 a week.

10

: Real GDP, % deviation from baseline

Source: Deloitte Access Economics Horizon model

The boost to nominal GDP (seen in Chart 2.3) roughly equals the direct cost to the Federal

Government of increasing allowances. That is because several factors affect the economy in offsetting

directions.

: Nominal GDP, % deviation from baseline


0.00%

0.05%

0.10%

0.15%

0.20%

2018 2020 2022 2024 2026 2028 2030

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

2018 2020 2022 2024 2026 2028 2030

11

Among the negatives, most notably, some of the extra spending by beneficiaries would be on imports

– see Chart 2.4.

: Real imports, % deviation from baseline


At the same time, a modest increase in the value of the Australian dollar would weigh on exports,

which would fall in real terms (that is, the quantity of exports would go down) – see Chart 2.5.

: Real exports, % deviation from baseline


0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

2018 2020 2022 2024 2026 2028 2030

-0.20%

-0.15%

-0.10%

-0.05%

0.00%

2018 2020 2022 2024 2026 2028 2030

12

Similarly, interest rates would also be a little higher than otherwise. Among other things, that would

see fewer new homes built (as well as less done by way of renovating old homes) – see Chart 2.6.

: Real housing investment, % deviation from baseline


Among the positives, the additional allowances would go as extra income to a group that, on average,

is the poorest of the poor in Australia. Other things equal, most of it is therefore spent. So it’s no

surprise that the bulk of the dollars – some $3.3 billion a year – shows up as extra spending by

consumers.

-0.6%

-0.5%

-0.4%

-0.3%

-0.2%

-0.1%

0.0%

0.1%

2018 2020 2022 2024 2026 2028 2030

13

: Real consumer spending, % deviation from baseline


And while imports would go up, the bulk of the extra spending by beneficiaries would be spent at

home. That extra spending would create some 12,000 extra jobs (seen in Chart 2.8).

: Jobs, % deviation from baseline


And the accompanying strength in the market for workers would lift wages (seen in Chart 2.9).

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

2018 2020 2022 2024 2026 2028 2030

0.00%

0.05%

0.10%

2018 2020 2022 2024 2026 2028 2030

14

: Average weekly earnings, % deviation from baseline


(Prices would also be higher, but the increase in wages would outweigh that in prices – see Chart

2.10.)

: Consumer prices, % deviation from baseline


0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

2018 2020 2022 2024 2026 2028 2030

-0.1%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

2018 2020 2022 2024 2026 2028 2030

15

Total real wages being paid to Australians would therefore lift by around 0.2% in 2020-21 (partly

thanks to more jobs, and partly as wage gains exceed price increases). Similarly, the stronger

economy would boost corporate profits, with that latter boost also running at close to 0.2%.

Finally, the stronger economy (more jobs, higher wages, stronger profits) would mean that the Federal

Government would raise about an extra $1.0 billion in taxes, while State and Territory Government

revenues would increase by some $0.25 billion.

Chart 2.11 shows the net cost to the Federal budget as a share of national income – that is, the direct

cost of extra allowances, less the savings from extra tax generated.

: Net cost to the Federal Budget - % of national income


(As the next section of the report notes, the model independently acts to boost the tax take over time

so as to ensure that the policy change has no impact on Federal fiscal sustainability. Both Chart 2.1

and Chart 2.11 exclude these latter impacts.)

2.3 Longer term economic impacts

As was clear from Chart 2.2 (the impact on the real economy) and Chart 2.8 (the impact on jobs), the

boost to the size of the Australian economy would tend to fade over time. That’s because the impact

of the increases to interest rates and exchange rates would gradually rise over time.

More importantly still, this policy change comes at a cost to the Federal Budget, but the model

assumes that – over time – taxes lift to mean that the debt levels of the Australian government return

to where they’d otherwise be.

The combination of those factors – very slight increases in taxes, interest rates and exchange rates

that occur over time – thereby gradually return the Australian economy back closer towards the path it

was otherwise on (the baseline scenario).

-0.20%

-0.15%

-0.10%

-0.05%

0.00%

2018 2020 2022 2024 2026 2028 2030

16

As a simple example of the impact of that, the net number of additional jobs created by this change in

policy – which stood at 12,000 extra jobs in 2020-21 – is estimated to slip back below 4,400 by

2024-25, and to be less than 500 extra workers by 2029-30.

That fading strength in the “prosperity positives” is no surprise. Some of the gains to the “size of the

pie” are generated by dipping into the Federal Budget to pay for higher allowances. The net cost of

that to Australian taxpayers is gradually clawed back via higher taxes and, as noted, the stronger

economy also shows up in higher interest and exchange rates.

Or, to put that another way, the prosperity allowances fade over time, but the most compelling

reasons to adopt this reform revolve more around fairness than they do around prosperity.

2.4 The ‘who’ and the ‘where’ of beneficiaries would increase the prosperity impact

It is important to note that the modelling may well understate the extent of the prosperity allowances.

Most notably, it is important that these dollars would flow to the poorest of the poor in Australia.

Their spending patterns are likely to differ to the averages assumed in the modelling here because of

who they are and because of where they live:

The beneficiaries are poor, so they’re likely to spend a larger share of any additional income and,

within that, the money is more likely to be spent on essentials such as food, heating and shelter.

That’s important, as such spending is less subject to import competition. Or, to put that another

way, more of those dollars are likely to stay in Australia than the model assumes.

And the beneficiaries disproportionately live in regional Australia – where, again, import

penetration is lower, so more of those dollars are likely to stay in Australia than the model

assumes.

2.5 Social benefits include better health

There is also the likelihood that better income for the unemployed and other groups who are

disadvantaged may lead to better national outcomes on indicators as diverse as health (for example,

see DiPrete and McManus, 2000) and crime (for example, see Altindag et al, 2011).

A detailed summary of this literature focusing on the effect on the family unit can be found in Gray et

al (2009). We have included a short summary of some of the findings which draws from that article as

well as other literature.

Periods of unemployment can be stressful, where individuals face markedly changed life

circumstances10.

For example, during periods of unemployment, individuals:

Are likely to receive lower incomes, both immediately and also upon re-employment;

Lose a large source of regular social interaction; and

May face a stigma associated with being unemployed (DiPrete and McManus, 2000).

Together, these effects can culminate in unemployed workers being more likely to develop certain

conditions and diseases. However, the causality also runs the other way, whereby people become

unemployed due to illnesses.

The causal link between unemployment and disease appears to be strongest for the following:

10 Research typically examines the causality generally either underpinned by studies of workers

following plant closures, or longitudinal studies tracking the same individual over time.

17

Mental health issues, where a number of papers identify unemployment affecting the whole

spectrum of mental health issues, from depression to schizophrenia; and

Cardiac/heart diseases, where the stress from unemployment causes increased incidence of

Cardiac/heart disease.

There are also flow on effects of individual unemployment for families and children in particular. Baron

(2008) find that children growing up in a household where their parents were on income support for

six or more years were less likely to complete Year 12 and less likely to obtain a Tertiary entrance

score than children from households who received no income support. A number of studies also find

evidence that the psychological impact of being unemployed can adversely affect upon parenting and

through that the wellbeing of the children (Elder 1999; Solantanus, Leinonen, & Punamaki, 2004).

Note that Deloitte Access Economics has made no attempt to adjust these results for the positives

flowing from reduced financial pressures on the poor to changes in key social outcomes such as health.

It is beyond the scope of this study.

2.6 Direct links between fairness and prosperity

Finally, the economic literature (see, for example, http://www.imf.org/external/np/fad/inequality/) has

increasingly identified inequality as a factor that can directly weigh on prosperity.

: Inequality and growth, percent of GDP and net income inequality, 1960-2010

Source: International Monetary Fund

For example, research by the IMF (https://blogs.imf.org/2017/09/20/growth-that-reaches-everyone-

facts-factors-tools/) indicates that:

http://www.imf.org/external/np/fad/inequality/

https://blogs.imf.org/2017/09/20/growth-that-reaches-everyone-facts-factors-tools/

https://blogs.imf.org/2017/09/20/growth-that-reaches-everyone-facts-factors-tools/

18

Nations with greater levels of inequality tend to have lower economic growth over time (in the

language used in this report, failures on fairness can limit success on prosperity – see Chart 2.12

above); while

The worse is inequality in a nation, then the shorter are its spells of high economic growth (see

Chart 2.13).

: Inequality and the durability of growth, duration of growth spells, average net

income inequality 1960-2010

Source: International Monetary Fund

The upshot is that the results in this report are likely to be conservative: the “prosperity dividend”

could be both larger and longer-lived than these results have it.

19

3 Fairness impacts

3.1 Fair’s fair

What’s the best way to achieve fairness?

That’s a big question, and only part of the answer is the result of the choices made in the Federal

Budget.

That said, the Budget is a key component of Australia’s social compact.

As Treasury notes, “Australia’s tax and transfer systems are highly progressive”. Its chart –

reproduced below with the latest data – shows that fairness is mostly achieved through government

spending (the blue bars) rather than through personal taxes (although they are also progressive) and

consumption taxes such as the GST (which are regressive – but are part of an overall system which is

quite progressive).

: Estimates of the progressivity of taxes and transfers

Source: Federal Treasury, Chart 2.11 on page 29 of the Rethink Tax Discussion Paper, March 2015; ABS Cat No. 6537.0

That essential point – that the most effective lever for achieving fairer outcomes is typically through

how governments spend rather than how they tax – isn’t widely appreciated.

Data from the Australian Bureau of Statistics (2018) is a good way to appreciate that point. Consider

the private income earned by households. Some households earn a lot of private income, and some

only a little.

The inequality implied by the initial distribution of private income can be considered as an index so as

to help illustrate how the actions of governments then improve on that starting point.

Chart 3.2 sets this out:

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%


Taxes on individuals' income Taxes on consumption, plus some production

Cash transfer benefits

% of gross income

20

Governments pay cash benefits such as age pensions, disability and carer payments, family

support payments, unemployment and study payments, and other payments. Other things equal,

these cash benefits reduce the inequality across Australian households by almost a fifth. (Or, in

other words, the inequality index in the chart below drops to 82.)

Income taxes further reduce that inequality by an additional tenth. (The inequality index drops

to 71.)

Social transfers in kind (such as the impact of the education and health systems) reduce the

inequality index further still, to 55.

Finally, production taxes (such as the GST, as well as taxes on fuel, alcohol, tobacco and the

like) raise the inequality index a little, lifting it back to 56.

: Index of inequality, 2015-16 (private income distribution = 100)

Source: Deloitte Access Economics; ABS Cat No. 6323.0

There’s a lot wrapped up in that summary above.

Other things equal, however, the simple point is that the two largest fairness levers in Australia are (1)

cash benefits and (2) the operation of the education and health systems.

This report considers the impact of potential increases focussed on the ‘unemployment and study

payments’ category of cash benefits.

3.2 Bottom line impacts on disposable incomes

This report describes the increase in allowances it is analysing as an increase in payments made to

“the poorest of the poor” in Australia.

That said, it is possible – for example – for an unemployed person to be living at home with their

parents. And, in turn, their parents may have high incomes. In other words, the impact of higher

allowances would be spread across households.

40

50

60

70

80

90

100

Private income After cash benefits After income taxes After socialtransfers in kind

After taxes onproduction

Index of inequality

21

Its impact is shown in Chart 3.3.11

: Increase in household disposable incomes, equivalised quintiles, per week

Source: Deloitte Access Economics

However, even allowing for the possibility of some higher income households to benefit, the bulk of the

dollars go to the lowest income quintile of households.12 Measured in dollar terms, the lowest quintile

receives six times the dollars going to the highest income quintile. This is consistent with previous

work which found that the largest beneficiaries of the policy change would be the bottom 5% of

households as this cohort has a large share of households where the main income earner is on

Newstart Allowance (ACOSS and UNSW, 2018).

That said, dollars aren’t the best way to assess the impact on fairness. What matters is the relative

impact of those extra dollars on disposable incomes. It is the latter measure, which is illustrated in

Chart 3.4.

And, on that measure, the proportionate impact becomes fully evident: the lowest quintile receives

twenty eight times the relative boost to its disposable incomes than does the highest income quintile –

an increase in income of 1.6% for the lowest quintile, versus 0.06% for the highest quintile.

11 Note that these are direct impacts. As noted in the previous chapter, there are a range of indirect impacts. That said, the latter vary notably over time, and the overall fairness impacts are best assessed by an examination of the direct impacts. 12 The ABS use an equivalence scale to adjust household incomes to take into account the ‘economies of scale’ that flow from sharing resources within households with more than one member. More information on the ABS equivalisation process is available at http://www.abs.gov.au/ausstats/[email protected]/Lookup/by%20Subject/6523.0~2015-16~Main%20Features~Key%20Concepts~3.

$0

$5

$10

$15


Additional dollars per week, equivalised disposable incomes, by quintile

http://www.abs.gov.au/ausstats/[email protected]/Lookup/by%20Subject/6523.0~2015-16~Main%20Features~Key%20Concepts~3

http://www.abs.gov.au/ausstats/[email protected]/Lookup/by%20Subject/6523.0~2015-16~Main%20Features~Key%20Concepts~3

22

: Increase in household disposable incomes, equivalised quintiles, %




Australia’s lowest income families.

By definition, these relativities are greater still in terms of individual incomes.

That illustrates the fairness strengths of the current proposal.

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%


Increase in equivalised disposable incomes, by quintile

23

4 Regional impacts

The regional estimates presented here are developed and tested using Deloitte Access Economics’ –

Regional General Equilibrium Model (DAE-RGEM). DAE-RGEM is a large scale, dynamic, multi-region,

multi-commodity CGE model of the world economy with bottom-up modelling of Australian regions.

These regional estimates are then calibrated to ensure that they are consistent with the aggregate

results produced by the Deloitte Horizon model which are presented in section 2.2.

This chapter presents a summary of those results while a full list of outcomes for each LGA and

summary results for the states and territories is contained in Appendix A.

4.1 Making impacts that matter

The different types of allowances that would be raised have different regional profiles (for example,

youth allowance recipients who are students tend to live in cities and large towns with universities and

TAFEs). That said, the bulk of the impact would be through increased Newstart allowances, and the

regional distribution of those allowances would boost both the prosperity and fairness impacts

discussed above.

From a prosperity viewpoint, unemployment in Australia is relatively higher outside our largest cities

and towns. Other things equal, that means that relatively more of the increased spending flowing

from higher allowances would tend to stay in Australia: being spent on locally produced products and

local labour.

This is what Figure 4.1 below shows. The darker regions which receive the largest per person

allowances tend to be in remote or regional Australia. This result is also presented in Table 4.1 below

which shows the results for the 20 LGAs which receive the largest per person benefit. Most of these

LGAs are in regional or remote Australia.

Table 4.1: Outcomes for key economic indicators for the top 20 LGAs affected in per person terms, change in

per person value, 2018-19

Local government area State Disposable income Consumption Economic output

Belyuen (S) NT $1,292 $1,281 $262 Wujal Wujal (S) QLD $982 $982 $201 Woorabinda (S) QLD $946 $947 $194 Aurukun (S) QLD $858 $861 $313 Yarrabah (S) QLD $812 $817 $167 Kowanyama (S) QLD $772 $778 $159 Tiwi Islands (R) NT $743 $751 $154 Ngaanyatjarraku (S) WA $734 $742 $152 Mount Magnet (S) WA $703 $712 $259 Hope Vale (S) QLD $699 $708 $145

Central Desert (R) NT $686 $696 $142 Cherbourg (S) QLD $670 $680 $247 West Arnhem (R) NT $651 $662 $135 Mornington (S) QLD $623 $635 $130 West Daly (R) NT $622 $634 $130 Pormpuraaw (S) QLD $619 $630 $129 Meekatharra (S) WA $581 $594 $121 MacDonnell (R) NT $566 $580 $119 East Arnhem (R) NT $542 $556 $114 Halls Creek (S) WA $532 $547 $112


24

Figure 4.1: Increase in regional disposable income per head for each local government area


25

From a fairness viewpoint, there is a relatively tight correlation between the least well-off districts in

the land (measured using the Socio-Economic Indexes for Areas (SEIFA) index) and the boost to

regional spending from this proposal, meaning that the regional economies most in need of help would

receive it were this proposal to be enacted.

: Increase in regional disposable income per head, mapped against regional SEIFA scores

Source: Deloitte Access Economics; ABS.stat database

Note: SEIFA score is based on an index of relative socio-economic advantage and disadvantage. . The higher the index

value the more advantaged a region is relative to other regions. Data is from 2016.

When it comes to the total impact by LGA the results are different. This is largely due to the large

variation of population in each LGA in Australia. As Table 4.2 below shows, the LGAs which receive the

largest aggregate benefit are in the capital cities and large regional centres. This is due to these

regions having larger populations, rather than a higher propensity to have individuals who receive the

payments.

Table 4.2: Outcomes for key economic indicators for each State and Territory, Total increase ($m), 2018-19

Local government area State Disposable income Consumption Economic output

Brisbane (C) QLD $134.40 $168.86 $73.62 Gold Coast (C) QLD $79.44 $95.92 $26.47 Moreton Bay (R) QLD $65.27 $77.56 $33.82 Logan (C) QLD $57.34 $65.75 $28.67 Fairfield (C) NSW $51.03 $56.09 $24.46 Canterbury-Bankstown (A)

NSW $49.16 $59.38 $25.89

Central Coast (C) (NSW) NSW $46.63 $55.98 $15.45 Sunshine Coast (R) QLD $45.48 $54.03 $14.91 Blacktown (C) NSW $45.33 $55.34 $24.13 Hume (C) VIC $41.37 $47.00 $20.49 Brimbank (C) VIC $41.14 $46.53 $20.29

Casey (C) VIC $38.14 $47.48 $20.70 Greater Geelong (C) VIC $37.42 $44.11 $12.17 Ipswich (C) QLD $35.92 $41.39 $18.05 Townsville (C) QLD $35.57 $40.64 $11.22 Salisbury (C) SA $33.28 $36.74 $16.02

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

500 600 700 800 900 1,000 1,100 1,200 1,300

$ p

er

pers

on

Index of Relative Socio-economic Advantage and Disadvantage

26

Cairns (R) QLD $32.66 $36.89 $10.18 Liverpool (C) NSW $31.88 $37.85 $16.50 Onkaparinga (C) SA $31.70 $36.11 $15.74

Unincorporated ACT ACT $30.51 $42.81 $18.67


Figure 4.2 shows how the increase in income flows through to regional consumption growth. Unlike

with income, the increase in consumer spending is more even across regions. That’s no surprise: as

is always the case, some income is spent in a different region to where it is earned. This is more

common in larger cities and towns and where allowance recipients are more likely to travel across LGA

boundaries for work or study or to go to the shops.

That said, there is still a relatively tight correlation between where the income is received and where it

is spent. This is particularly true for regional and remote areas where the distances are larger.

This is also the case when it comes to regional economic growth. However, as Figure 4.3 shows, the

correlation between where the income is earned and economic activity is not as strong as it is for

consumption. This is due to the degree to which goods in particular (for example, fresh food or

manufactured goods) are produced elsewhere in Australia or imported from overseas and then

consumed within the local area. That said, the economies in the regions that receive a higher share of

the increase in income do tend to benefit more.

27

Figure 4.2: Increase in regional consumer spending per head for each local government area


28

Figure 4.3: Increase in regional economic output per head for each local government area


29

References

Altindag, D. T. (2012). Crime and unemployment: Evidence from Europe. International review of Law

and Economics, 32(1), 145-157.

Australian Bureau of Statistics (2018), Government Benefits, Taxes and Household Income, Australia,

2015-16, accessible at http://www.abs.gov.au/AUSSTATS/[email protected]/DetailsPage/6537.02015-

16?OpenDocument

Australian Council of Social Service and University of New South Wales, (2018). “Inequality In

Australia 2018”, available at: https://www.acoss.org.au/wp-content/uploads/2018/07/Inequality-in-

Australia-2018.pdf

Australian Government (2013). Guide to Australian longitudinal studies. FaHCSIA Research and

Analysis Branch.

Australian Institute of Health and Welfare (1999) “Health consequences of unemployment: a review of

the evidence”

Baron, J. (2008). Exploring the factors associated with youths’ educational outcomes: The role of locus

of control and parental socio-economic background (Youth in Focus Project Discussion Paper No. 4).

Canberra: Australian National University.

Carroll, N. (2007). Unemployment and Psychological Well‐being. Economic Record, 83(262), 287-302.

Clark and Oswald (1994) “Unhappiness and unemployment” The Economic Journal 104(424): 648-659

Clark, A. E. (2003). Unemployment as a social norm: Psychological evidence from panel data. Journal

of labor economics, 21(2), 323-351.

Classe and Dunn (2012) “The effect of job loss and unemployment duration on suicide risk in the

United States: A new look using mass-layoffs and unemployment duration” Health Economics 21(3):

338-350

Commonwealth of Australia 2015, Re:think Tax Discussion Paper, Better tax system, better Australia,

March, Available at: http://bettertax.gov.au/publications/discussion-paper/

Debelle, G and Vickery, J, ‘The macroeconomics of Australian unemployment’, Unemployment and the

Australian Labour Market Conference, Reserve Bank of Australia, 9–10 June 1998.

DiPrete, T. A. and McManus, P. A. (2000), “Family Change, Employment Transitions, and the Welfare

State: Household Income Dynamics in the United States and Germany”, American Sociological Review

Vol. 65, No. 3 (Jun., 2000), pp. 343-370

Dockery, A. M. (2005). The happiness of young Australians: Empirical evidence on the role of labour

market experience. Economic Record, 81(255), 322-335.Carroll, N. (2007). Unemployment and

Psychological Well‐being. Economic Record, 83(262), 287-302.

Elder, G. (1999). Children of the Great Depression: Social change in life experience (25th anniversary

ed.). Chicago: University of Chicago Press.

Eliason and Storrie (2009) “Does job loss shorten life?” Journal of Human Resources 44(2): 277-302

Gerdtham and Johannesson (2003) “A note on the effect of unemployment on mortality” Journal of

health economics 22(3): 505-518

http://www.abs.gov.au/AUSSTATS/[email protected]/DetailsPage/6537.02015-16?OpenDocument

http://www.abs.gov.au/AUSSTATS/[email protected]/DetailsPage/6537.02015-16?OpenDocument

https://www.acoss.org.au/wp-content/uploads/2018/07/Inequality-in-Australia-2018.pdf

https://www.acoss.org.au/wp-content/uploads/2018/07/Inequality-in-Australia-2018.pdf

http://bettertax.gov.au/publications/discussion-paper/

30

Gielen, A. C., and J. C. van Ours. (2014). Unhappiness and job finding. Economica 81:323, 544–565.

Gould, E.D, Weinburg, B.A. and Mustard, D.B. (2002), “Crime rates and local labour market

opportunities in the US: 1979-1997”, accessible at

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.196.1964&rep=rep1&type=pdf

Gray, M., Edwards, B., Hayes, A., & Baxter, J. (2009). The impacts of recessions on families. Family

Matters, 83, 7-14.

Halliday (2014) “Unemployment and mortality: Evidence from the PSID” Social Science and Medicine

113: 15-22

Helliwell, J. F., & Huang, H. (2014). New measures of the costs of unemployment: Evidence from the

subjective well‐being of 3.3 million Americans. Economic Inquiry, 52(4), 1485-1502.

Herbig et al (2013) “Health in the long term unemployed” Deutsches Ärzteblatt International 110(23-

24): 413-419

Hetschko, C., A. Knabe, and R. Schob. (2014). Changing identity: Retiring from unemployment.

Economic Journal 124:575, 149–166.

International Monetary Fund, “Growth That Reaches Everyone: Facts, Factors, Tools”, (2017),

accessible at https://blogs.imf.org/2017/09/20/growth-that-reaches-everyone-facts-factors-

tools/#post/0

International Monetary Fund, “IMF's Work on Income Inequality”, (2018), accessible at


Janlert et al. (2014) “Length of unemployment and health-related outcomes: a life-course analysis”

European Journal of Public Health 25(4): 662-667

Maeda et al. (2014) “Association between the unemployment rate and inpatient cost per discharge by

payer in the US, 2005-2010” BMC health services research 14(1): 378

Mathers and Scholfield (1998) “The health consequences of unemployment: the evidence” Medical

Journal of Australia 168 (4): 179-182

McInerney and Mellor (2012) “State unemployment in recessions during 1991-2009 was linked to

faster growth in Medicare spending” Health Affairs 31(11): 2464-2473

Ruhm (2007) “A healthy economy can break your heart” Demography 44(4): 829-848

Salm (2009) “Does job loss cause ill health” Health Economics 18(9): 1075-1089

Solantaus, T., Leinonen, J., & Punamäki, R.- L. (2004). Children’s mental health in times of economic

recession: Replication and extension of the family economic stress model in Finland. Developmental

Psychology, 40, 412–429.

Strully (2009) “Job Loss and Health in the U.S. Labor Market” Demography 46(2): 221–246.

Sullivan and von Wachter (2009) “Job displacement and mortality: an analysis using administrative

data” The Quarterly Journal of Economics 124(3): 1265-106

The University of Melbourne (2016). The Household, Income and Labour Dynamics in Australia

(HILDA) Survey. https://www.melbourneinstitute.com/hilda/

Weatherburn, D. (2001). What causes crime?. BOCSAR NSW Crime and Justice Bulletins, 11.

Whooley et al. “Depressive symptoms, unemployment and loss of income: The CARDIA study”

Archives of Internal Medicine 162(22): 2614-2620

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.196.1964&rep=rep1&type=pdf

https://blogs.imf.org/2017/09/20/growth-that-reaches-everyone-facts-factors-tools/#post/0

https://blogs.imf.org/2017/09/20/growth-that-reaches-everyone-facts-factors-tools/#post/0


https://www.melbourneinstitute.com/hilda/

31

Winkelmann, R. (2009). Unemployment, social capital, and subjective well-being. Journal of Happiness

Studies 10:4, 421–430.

Winkelmann, R. (2014). Unemployment and happiness. IZA World of Labor, available at:

http://wol.iza.org/articles/unemployment-and-happiness-1.pdf

Wulfgramm, M. (2014). Life satisfaction effects of unemployment in Europe: The moderating influence

of labour market policy. Journal of European Social Policy, 24(3), 258-272.

http://wol.iza.org/articles/unemployment-and-happiness-1.pdf

32

Appendix A: LGA outcomes

Table A.1: Outcomes for key economic indicators for each local government area, change in per person

value, 2018-19

Local government area State Disposable

income Consumption

Economic output

Belyuen (S) NT $1,292 $1,281 $262

Wujal Wujal (S) QLD $982 $982 $201 Woorabinda (S) QLD $946 $947 $194 Aurukun (S) QLD $858 $861 $313 Yarrabah (S) QLD $812 $817 $167 Kowanyama (S) QLD $772 $778 $159 Tiwi Islands (R) NT $743 $751 $154 Ngaanyatjarraku (S) WA $734 $742 $152 Mount Magnet (S) WA $703 $712 $259 Hope Vale (S) QLD $699 $708 $145 Central Desert (R) NT $686 $696 $142 Cherbourg (S) QLD $670 $680 $247 West Arnhem (R) NT $651 $662 $135

Mornington (S) QLD $623 $635 $130 West Daly (R) NT $622 $634 $130 Pormpuraaw (S) QLD $619 $630 $129 Meekatharra (S) WA $581 $594 $121 MacDonnell (R) NT $566 $580 $119 East Arnhem (R) NT $542 $556 $114 Halls Creek (S) WA $532 $547 $112 Doomadgee (S) QLD $524 $539 $110 Roper Gulf (R) NT $521 $536 $110 Yalgoo (S) WA $509 $524 $190 Lockhart River (S) QLD $485 $501 $103 Derby-West Kimberley (S) WA $481 $497 $181

Barkly (R) NT $471 $488 $100 Palm Island (S) QLD $455 $472 $97 Coober Pedy (DC) SA $440 $458 $94 Napranum (S) QLD $438 $456 $93 Anangu Pitjantjatjara (AC) SA $437 $455 $93 Torres Strait Island (R) QLD $417 $435 $89 Carpentaria (S) QLD $405 $424 $87 Wiluna (S) WA $386 $405 $83 Walgett (A) NSW $376 $395 $81 Cook (S) QLD $370 $390 $80 Cue (S) WA $369 $389 $80

Peterborough (DC) SA $369 $388 $141 Central Darling (A) NSW $351 $371 $76 Victoria Daly (R) NT $346 $367 $75 Dundas (S) WA $338 $359 $73 Northern Peninsula Area (R) QLD $326 $347 $71 Brewarrina (A) NSW $325 $346 $71 West Coast (M) TAS $317 $338 $69 Laverton (S) WA $316 $338 $69 Croydon (S) QLD $307 $329 $67 Whyalla (C) SA $307 $328 $119 Playford (C) SA $306 $328 $273 Break O'Day (M) TAS $302 $324 $66

Burke (S) QLD $296 $318 $65 Unincorporated SA SA $293 $315 $64 Coonamble (A) NSW $290 $313 $114 Kyogle (A) NSW $290 $312 $114 Wyndham-East Kimberley (S) WA $289 $312 $64 Paroo (S) QLD $287 $309 $63

33

Ceduna (DC) SA $282 $304 $111 Alice Springs (T) NT $279 $301 $62 Port Augusta (C) SA $278 $301 $109

Carnarvon (S) WA $274 $297 $61 Coomalie (S) NT $271 $294 $107 George Town (M) TAS $271 $294 $107 Port Pirie City and Dists (M) SA $268 $291 $106 Katherine (T) NT $267 $290 $106 Broome (S) WA $258 $281 $102 Tenterfield (A) NSW $257 $281 $102 Nambucca (A) NSW $252 $276 $146 Lismore (C) NSW $251 $275 $100 Byron (A) NSW $251 $274 $100 Collie (S) WA $248 $272 $99 Glen Innes Severn (A) NSW $246 $270 $98

Fraser Coast (R) QLD $244 $268 $97 Mareeba (S) QLD $244 $268 $141 Greater Geraldton (C) WA $243 $267 $97 Fairfield (C) NSW $242 $266 $221 Trayning (S) WA $241 $265 $54 Leonora (S) WA $241 $265 $54 Sandstone (S) WA $241 $265 $96 Launceston (C) TAS $241 $265 $96 Brighton (M) TAS $239 $263 $219 Nannup (S) WA $238 $262 $95 Copper Coast (DC) SA $238 $262 $95 Central Goldfields (S) VIC $236 $260 $94

Pingelly (S) WA $236 $260 $94 Bourke (A) NSW $235 $260 $53 Bundaberg (R) QLD $235 $259 $94 Latrobe (C) (Vic.) VIC $234 $258 $94 Salisbury (C) SA $233 $258 $215 Murray Bridge (RC) SA $233 $257 $93 Carnamah (S) WA $232 $256 $93 Northam (S) WA $231 $256 $93 Bunbury (C) WA $231 $255 $93 Burnie (C) TAS $230 $255 $93 Glenorchy (C) TAS $230 $255 $212

Kempsey (A) NSW $229 $253 $92 Torres (S) QLD $226 $251 $51 Katanning (S) WA $226 $251 $91 Quairading (S) WA $226 $250 $91 Mid Murray (DC) SA $224 $248 $90 Broken Hill (C) NSW $221 $246 $50 Moree Plains (A) NSW $220 $245 $50 Central Highlands (M) (Tas.) TAS $220 $245 $50 Devonport (C) TAS $220 $244 $89 Derwent Valley (M) TAS $218 $243 $203 Gympie (R) QLD $217 $242 $127 Upper Gascoyne (S) WA $215 $240 $49

Clarence Valley (A) NSW $213 $238 $86 Richmond Valley (A) NSW $211 $236 $86 Waroona (S) WA $210 $235 $85 Port Adelaide Enfield (C) SA $210 $235 $196 Gladstone (R) QLD $208 $233 $85 Northampton (S) WA $208 $233 $85 Warren (A) NSW $207 $232 $47 Bellingen (A) NSW $207 $232 $122 Kwinana (C) WA $206 $231 $193 Cassowary Coast (R) QLD $205 $230 $84 Rockhampton (R) QLD $204 $230 $83 Berri and Barmera (DC) SA $204 $229 $83

Renmark Paringa (DC) SA $203 $228 $83 Wentworth (A) NSW $203 $228 $83 Mid-Coast (A) NSW $203 $228 $120 Nungarin (S) WA $202 $228 $47

34

Armidale Regional (A) NSW $202 $228 $83 Tablelands (R) QLD $202 $227 $83 Charters Towers (R) QLD $202 $227 $82

Mount Isa (C) QLD $201 $226 $46 East Gippsland (S) VIC $198 $223 $81 Douglas (S) QLD $197 $223 $81 Cairns (R) QLD $197 $222 $117 South Burnett (R) QLD $195 $221 $80 Brimbank (C) VIC $195 $220 $184 Coffs Harbour (C) NSW $195 $220 $116 Broomehill-Tambellup (S) WA $194 $220 $80 Mandurah (C) WA $194 $220 $183 Goomalling (S) WA $194 $219 $80 Wyalkatchem (S) WA $193 $218 $79 Port Lincoln (C) SA $193 $218 $79

Armadale (C) WA $192 $217 $181 Fremantle (C) WA $191 $217 $181 Liverpool Plains (A) NSW $190 $216 $78 Gilgandra (A) NSW $189 $215 $44 Kentish (M) TAS $189 $215 $78 Loddon (S) VIC $189 $215 $78 Huon Valley (M) TAS $189 $215 $179 Hume (C) VIC $189 $215 $179 Cessnock (C) NSW $189 $215 $113 Dorset (M) TAS $188 $214 $78 Warrumbungle Shire (A) NSW $188 $214 $78 Mount Gambier (C) SA $188 $214 $78

Tammin (S) WA $188 $214 $78 Coolgardie (S) WA $188 $214 $78 Inverell (A) NSW $188 $214 $78 The Coorong (DC) SA $186 $212 $77 Murray (S) WA $186 $212 $176 Onkaparinga (C) SA $186 $211 $176 Albury (C) NSW $185 $211 $77 Mildura (RC) VIC $185 $211 $77 Gawler (T) SA $185 $211 $176 Lithgow (C) NSW $182 $208 $110 Townsville (C) QLD $182 $208 $110

Menzies (S) WA $181 $207 $42 Ballarat (C) VIC $181 $207 $109 Gosnells (C) WA $180 $206 $172 Cowra (A) NSW $179 $205 $75 Narromine (A) NSW $179 $205 $74 Plantagenet (S) WA $179 $205 $74 Glenelg (S) VIC $178 $204 $74 Logan (C) QLD $178 $204 $170 Somerset (R) QLD $177 $203 $170 Moora (S) WA $177 $203 $74 Bass Coast (S) VIC $177 $203 $74 Barunga West (DC) SA $177 $203 $74

Hinchinbrook (S) QLD $177 $203 $74 Gnowangerup (S) WA $176 $202 $73 Tasman (M) TAS $176 $202 $73 Narrabri (A) NSW $175 $202 $73 Yankalilla (DC) SA $175 $202 $73 York (S) WA $175 $201 $73 Waratah/Wynyard (M) TAS $174 $201 $73 Wagin (S) WA $174 $200 $73 Eurobodalla (A) NSW $174 $200 $73 Greater Shepparton (C) VIC $173 $200 $73 Muswellbrook (A) NSW $173 $199 $72 Southern Downs (R) QLD $173 $199 $72

Pyrenees (S) VIC $173 $199 $72 Ipswich (C) QLD $172 $199 $165 Toodyay (S) WA $172 $198 $72 Port Hedland (T) WA $172 $198 $72

35

Elliston (DC) SA $172 $198 $72 Belmont (C) WA $171 $198 $165 Tweed (A) NSW $171 $198 $104

Narrogin (S) WA $171 $197 $72 Goyder (DC) SA $171 $197 $72 Yorke Peninsula (DC) SA $170 $197 $71 Greater Dandenong (C) VIC $170 $197 $164 Gunnedah (A) NSW $170 $196 $71 Flinders (M) (Tas.) TAS $169 $196 $40 Flinders Ranges (DC) SA $169 $196 $71 Wattle Range (DC) SA $169 $196 $71 Morawa (S) WA $169 $196 $71 Greater Bendigo (C) VIC $169 $195 $103 Southern Midlands (M) TAS $168 $195 $71 Narrandera (A) NSW $168 $195 $103

Northern Midlands (M) TAS $168 $194 $71 Maribyrnong (C) VIC $168 $194 $162 Parkes (A) NSW $168 $194 $71 Lachlan (A) NSW $167 $193 $39 Adelaide (C) SA $166 $193 $161 Wakefield (DC) SA $166 $192 $70 Unincorporated NT NT $166 $192 $39 Lockyer Valley (R) QLD $166 $192 $101 Donnybrook-Balingup (S) WA $165 $192 $70 Bogan (A) NSW $165 $192 $70 Mingenew (S) WA $165 $191 $70 Tamworth Regional (A) NSW $165 $191 $69

Swan (C) WA $164 $191 $159 Ararat (RC) VIC $164 $190 $69 Newcastle (C) NSW $163 $190 $100 Bridgetown-Greenbushes (S) WA $163 $190 $69 Central Coast (M) (Tas.) TAS $163 $189 $69 Yilgarn (S) WA $162 $189 $69 North Burnett (R) QLD $162 $189 $69 Burdekin (S) QLD $162 $189 $69 Rockingham (C) WA $162 $189 $157 Northern Grampians (S) VIC $162 $188 $68 Sorell (M) TAS $161 $188 $157

Bassendean (T) WA $161 $188 $156 Wongan-Ballidu (S) WA $161 $188 $68 Cloncurry (S) QLD $161 $187 $38 Port Macquarie-Hastings (A) NSW $160 $187 $68 Wellington (S) VIC $160 $187 $68 Shoalhaven (C) NSW $160 $186 $98 Warrnambool (C) VIC $159 $185 $67 Denmark (S) WA $158 $184 $67 Brookton (S) WA $157 $184 $67 Western Downs (R) QLD $157 $184 $67 Western Plains Regional (A) NSW $157 $184 $97 Victoria Park (T) WA $157 $183 $153

Benalla (RC) VIC $156 $183 $67 Victor Harbor (C) SA $156 $183 $66 Coorow (S) WA $155 $182 $66 Charles Sturt (C) SA $155 $182 $152 Manjimup (S) WA $155 $182 $66 Balonne (S) QLD $154 $181 $96 Wodonga (C) VIC $154 $181 $95 Murweh (S) QLD $154 $181 $37 Whitsunday (R) QLD $154 $181 $66 Alexandrina (DC) SA $153 $180 $65 Koorda (S) WA $152 $179 $37 Kellerberrin (S) WA $152 $179 $65

Yarriambiack (S) VIC $151 $178 $65 Dumbleyung (S) WA $151 $178 $65 Campaspe (S) VIC $151 $178 $65 Woodanilling (S) WA $151 $178 $65

36

Greater Geelong (C) VIC $151 $178 $94 Merredin (S) WA $151 $178 $64 Gundagai (A) NSW $150 $177 $64

Perth (C) WA $150 $177 $148 Marion (C) SA $150 $177 $147 Ballina (A) NSW $149 $176 $64 Bayswater (C) WA $149 $176 $147 Beverley (S) WA $149 $176 $64 Bega Valley (A) NSW $149 $176 $64 Boulia (S) QLD $148 $175 $36 Mallala (DC) SA $147 $174 $63 Mackay (R) QLD $147 $174 $92 West Tamar (M) TAS $147 $174 $63 Moira (S) VIC $147 $174 $63 Hepburn (S) VIC $147 $174 $63

Karoonda East Murray (DC) SA $146 $173 $63 Glamorgan/Spring Bay (M) TAS $145 $173 $63 Livingstone (S) QLD $145 $173 $91 Liverpool (C) NSW $145 $172 $143 Sunshine Coast (R) QLD $145 $172 $91 Moreton Bay (R) QLD $144 $171 $143 Campbelltown (C) (NSW) NSW $144 $171 $143 Goulburn Mulwaree (A) NSW $144 $171 $62 Wanneroo (C) WA $144 $171 $142 Hilltops (A) NSW $143 $170 $62 Mount Alexander (S) VIC $143 $170 $62 Southern Grampians (S) VIC $143 $170 $62

Kangaroo Island (DC) SA $143 $170 $35 Irwin (S) WA $143 $170 $62 Port Stephens (A) NSW $142 $169 $89 Gannawarra (S) VIC $142 $169 $61 Darebin (C) VIC $142 $169 $141 Albany (C) WA $142 $169 $61 Latrobe (M) (Tas.) TAS $142 $169 $61 Frankston (C) VIC $141 $169 $140 Mid-Western Regional (A) NSW $141 $169 $61 Wagga Wagga (C) NSW $141 $168 $89 Mount Remarkable (DC) SA $141 $168 $61

Wollongong (C) NSW $141 $168 $89 Hindmarsh (S) VIC $141 $168 $61 Loxton Waikerie (DC) SA $141 $168 $61 Cunderdin (S) WA $140 $168 $34 Wagait (S) NT $140 $167 $34 Meander Valley (M) TAS $140 $167 $61 Streaky Bay (DC) SA $140 $167 $61 Scenic Rim (R) QLD $139 $166 $88 Leeton (A) NSW $138 $166 $87 Edward River (A) NSW $138 $165 $60 West Torrens (C) SA $138 $165 $138 Swan Hill (RC) VIC $138 $165 $60

Noosa (S) QLD $137 $165 $60 Harvey (S) WA $137 $165 $60 Hobart (C) TAS $137 $165 $137 Toowoomba (R) QLD $137 $165 $87 Stirling (C) WA $137 $164 $137 Flinders (S) (Qld) QLD $137 $164 $34 Central Coast (C) (NSW) NSW $137 $164 $87 Kalgoorlie/Boulder (C) WA $136 $164 $59 Maitland (C) NSW $136 $163 $86 Kondinin (S) WA $136 $163 $33 Circular Head (M) TAS $135 $163 $33 Hay (A) NSW $135 $162 $59

Bathurst Regional (A) NSW $135 $162 $59 Shellharbour (C) NSW $134 $162 $85 Shark Bay (S) WA $134 $162 $33 Wangaratta (RC) VIC $134 $161 $59

37

Federation (A) NSW $134 $161 $59 Busselton (C) WA $133 $161 $58 Moreland (C) VIC $133 $161 $134

Yarra (C) VIC $133 $161 $134 Gingin (S) WA $133 $160 $58 Gold Coast (C) QLD $133 $160 $85 East Pilbara (S) WA $133 $160 $58 Weddin (A) NSW $133 $160 $58 Chapman Valley (S) WA $133 $160 $58 Clarence (C) TAS $132 $160 $133 Canterbury-Bankstown (A) NSW $132 $160 $133 Orange (C) NSW $132 $160 $84 West Arthur (S) WA $132 $160 $58 Cockburn (C) WA $132 $159 $133 Dungog (A) NSW $132 $159 $58

Berrigan (A) NSW $132 $159 $58 Baw Baw (S) VIC $132 $159 $58 Colac-Otway (S) VIC $131 $159 $58 Northern Areas (DC) SA $131 $158 $32 Snowy Valleys (A) NSW $131 $158 $57 Uralla (A) NSW $130 $158 $57 Forbes (A) NSW $130 $158 $57 Horsham (RC) VIC $130 $157 $57 Melton (C) VIC $130 $157 $131 Strathbogie (S) VIC $129 $157 $57 Mitchell (S) VIC $128 $156 $57 Whittlesea (C) VIC $128 $156 $130

Dowerin (S) WA $128 $156 $57 Gwydir (A) NSW $128 $155 $56 Towong (S) VIC $127 $155 $56 Dardanup (S) WA $127 $154 $56 Blacktown (C) NSW $126 $154 $128 Augusta-Margaret River (S) WA $125 $153 $56 Canning (C) WA $124 $152 $127 Buloke (S) VIC $124 $152 $55 Lake Macquarie (C) NSW $122 $150 $79 Vincent (C) WA $122 $150 $125 South Gippsland (S) VIC $122 $150 $55

Esperance (S) WA $122 $150 $55 Corangamite (S) VIC $122 $150 $54 Capel (S) WA $122 $150 $54 Dandaragan (S) WA $121 $149 $54 Murrindindi (S) VIC $121 $149 $54 West Wimmera (S) VIC $121 $149 $54 Three Springs (S) WA $121 $149 $54 Cumberland (A) NSW $121 $149 $124 Moorabool (S) VIC $119 $147 $123 Corrigin (S) WA $119 $147 $53 Coolamon (A) NSW $118 $146 $53 Singleton (A) NSW $118 $146 $77

Clare and Gilbert Valleys (DC) SA $118 $146 $53 Tumby Bay (DC) SA $118 $146 $53 Ravensthorpe (S) WA $117 $146 $53 Wyndham (C) VIC $117 $145 $121 Darwin (C) NT $117 $145 $121 Wickepin (S) WA $117 $145 $30 Westonia (S) WA $117 $145 $30 Walcha (A) NSW $117 $145 $53 Boyup Brook (S) WA $117 $145 $53 Palmerston (C) NT $116 $144 $120 Kulin (S) WA $116 $144 $52 Temora (A) NSW $115 $144 $52

Tea Tree Gully (C) SA $115 $143 $119 Casey (C) VIC $115 $143 $119 Boddington (S) WA $115 $143 $52 Bulloo (S) QLD $114 $143 $29

38

Hobsons Bay (C) VIC $114 $142 $118 Richmond (S) QLD $114 $142 $29 Cuballing (S) WA $113 $141 $51

Blayney (A) NSW $112 $141 $51 Mount Barker (DC) SA $112 $140 $51 Wandering (S) WA $111 $140 $51 Bruce Rock (S) WA $110 $139 $50 Penrith (C) NSW $110 $139 $116 Brisbane (C) QLD $110 $139 $115 Cobar (A) NSW $110 $138 $28 Light (RegC) SA $109 $138 $50 Goondiwindi (R) QLD $109 $138 $50 Upper Hunter Shire (A) NSW $109 $138 $50 Blackall-Tambo (R) QLD $109 $137 $28 Maranoa (R) QLD $109 $137 $50

Kingborough (M) TAS $108 $137 $114 South Perth (C) WA $108 $136 $114 Redland (C) QLD $108 $136 $113 Norwood Payneham St Peters (C)

SA $107 $135 $113

Campbelltown (C) (SA) SA $107 $135 $113 Snowy Monaro Regional (A) NSW $106 $135 $49 Moyne (S) VIC $106 $134 $49 Mundaring (S) WA $106 $134 $112 Bland (A) NSW $106 $134 $49 Winton (S) QLD $106 $134 $27 Franklin Harbour (DC) SA $105 $134 $49

Lockhart (A) NSW $105 $134 $49 Naracoorte and Lucindale (DC) SA $105 $133 $48 Kalamunda (C) WA $105 $133 $111 Lower Eyre Peninsula (DC) SA $104 $133 $48 Cardinia (S) VIC $104 $133 $111 Griffith (C) NSW $104 $132 $70 Indigo (S) VIC $104 $132 $70 Cranbrook (S) WA $103 $132 $48 Prospect (C) SA $103 $132 $110 Carrathool (A) NSW $103 $132 $48 Subiaco (C) WA $103 $132 $110

Kojonup (S) WA $103 $131 $27 Golden Plains (S) VIC $103 $131 $69 Alpine (S) VIC $102 $131 $47 Mansfield (S) VIC $102 $131 $47 Greater Hume Shire (A) NSW $102 $130 $47 Port Phillip (C) VIC $101 $129 $108 Oberon (A) NSW $101 $129 $68 Diamantina (S) QLD $100 $129 $26 Holdfast Bay (C) SA $100 $129 $107 Moonee Valley (C) VIC $100 $128 $107 Banana (S) QLD $100 $128 $47 Junee (A) NSW $99 $128 $47

Orroroo/Carrieton (DC) SA $99 $128 $26 Serpentine-Jarrahdale (S) WA $98 $127 $106 Southern Mallee (DC) SA $98 $126 $46 Central Highlands (R) (Qld) QLD $97 $126 $46 Etheridge (S) QLD $97 $126 $26 Mornington Peninsula (S) VIC $97 $126 $105 Barossa (DC) SA $97 $125 $46 Murray River (A) NSW $96 $125 $45 Yarra Ranges (S) VIC $96 $125 $104 Exmouth (S) WA $96 $124 $25 Parramatta (C) NSW $96 $124 $104 Robe (DC) SA $95 $124 $45

Blue Mountains (C) NSW $95 $124 $103 Kingston (DC) (SA) SA $95 $124 $45 Mitcham (C) SA $94 $123 $103 Knox (C) VIC $93 $122 $102

39

Maroondah (C) VIC $93 $121 $101 Hawkesbury (C) NSW $92 $121 $101 Barcoo (S) QLD $92 $121 $25

Banyule (C) VIC $92 $121 $101 Joondalup (C) WA $91 $120 $100 Grant (DC) SA $90 $119 $43 Inner West (A) NSW $89 $118 $98 Narembeen (S) WA $88 $117 $24 Balranald (A) NSW $88 $117 $43 Longreach (R) QLD $88 $117 $24 Barcaldine (R) QLD $88 $117 $24 Karratha (C) WA $87 $116 $42 Queenscliffe (B) VIC $87 $116 $61 Walkerville (M) SA $86 $115 $96 Unincorporated NSW NSW $86 $115 $23

Chittering (S) WA $85 $115 $42 King Island (M) TAS $85 $114 $23 Melbourne (C) VIC $85 $114 $95 Kingston (C) (Vic.) VIC $84 $113 $94 Murrumbidgee (A) NSW $84 $113 $41 Mosman Park (T) WA $84 $113 $94 Quilpie (S) QLD $83 $112 $23 Cabonne (A) NSW $82 $111 $40 Tatiara (DC) SA $82 $111 $40 Dalwallinu (S) WA $82 $111 $23 Sydney (C) NSW $81 $110 $92 Burwood (A) NSW $81 $110 $92

Upper Lachlan Shire (A) NSW $80 $109 $40 Unley (C) SA $79 $109 $91 East Fremantle (T) WA $79 $108 $90 Litchfield (M) NT $78 $108 $90 Melville (C) WA $78 $107 $89 Cleve (DC) SA $77 $106 $39 Adelaide Hills (DC) SA $76 $106 $88 Wudinna (DC) SA $76 $105 $38 Unincorporated ACT ACT $73 $103 $86 Strathfield (A) NSW $73 $103 $85 Monash (C) VIC $73 $102 $85

Georges River (A) NSW $72 $102 $85 Whitehorse (C) VIC $72 $102 $85 Macedon Ranges (S) VIC $71 $101 $37 Surf Coast (S) VIC $69 $98 $36 Kiama (A) NSW $69 $98 $36 Wollondilly (A) NSW $67 $97 $81 Queanbeyan-Palerang Regional (A)

NSW $65 $95 $50

Manningham (C) VIC $65 $95 $79 Mukinbudin (S) WA $65 $95 $34 Mount Marshall (S) WA $64 $94 $34 Stonnington (C) VIC $63 $93 $78

Yass Valley (A) NSW $62 $92 $48 Glen Eira (C) VIC $62 $92 $76 McKinlay (S) QLD $61 $91 $19 Camden (A) NSW $61 $91 $76 Wingecarribee (A) NSW $61 $91 $48 Burnside (C) SA $60 $90 $75 Ryde (C) NSW $59 $89 $74 Nillumbik (S) VIC $59 $89 $74 Randwick (C) NSW $57 $87 $72 Lake Grace (S) WA $57 $87 $18 Isaac (R) QLD $56 $86 $31 Kimba (DC) SA $55 $85 $31

Claremont (T) WA $54 $84 $70 Victoria Plains (S) WA $53 $83 $30 Williams (S) WA $52 $82 $30 Boroondara (C) VIC $50 $80 $67

40

Cambridge (T) WA $49 $79 $66 Hornsby (A) NSW $48 $79 $66 Bayside (C) VIC $47 $60 $50

Sutherland Shire (A) NSW $47 $77 $64 Roxby Downs (M) SA $46 $76 $16 Nedlands (C) WA $46 $76 $63 Jerramungup (S) WA $44 $74 $27 Kent (S) WA $43 $74 $15 Canada Bay (A) NSW $43 $73 $61 The Hills Shire (A) NSW $43 $73 $61 Weipa (T) QLD $43 $73 $15 Waverley (A) NSW $40 $71 $59 Unincorporated Vic VIC $39 $69 $14 Perenjori (S) WA $38 $69 $25 Cottesloe (T) WA $37 $68 $57

Willoughby (C) NSW $37 $67 $56 Northern Beaches (A) NSW $35 $66 $55 Hunters Hill (A) NSW $32 $63 $52 Woollahra (A) NSW $31 $62 $51 North Sydney (A) NSW $31 $61 $51 Lane Cove (A) NSW $30 $61 $51 Peppermint Grove (S) WA $30 $61 $50 Ashburton (S) WA $29 $60 $22 Bayside (C) NSW $29 $60 $50 Ku-ring-gai (A) NSW $25 $56 $47 Mosman (A) NSW $21 $52 $43 Mapoon (S) QLD $0 $32 $7

Maralinga Tjarutja (AC) SA $0 $32 $7 Murchison (S) WA $0 $32 $12


Table A.2: Outcomes for key economic indicators for each local government area, Total increase ($m),

2018-19

Local government area State Disposable

income Consumption

Economic output

Brisbane (C) QLD $134.40 $168.86 $73.62 Gold Coast (C) QLD $79.44 $95.92 $26.47 Moreton Bay (R) QLD $65.27 $77.56 $33.82

Logan (C) QLD $57.34 $65.75 $28.67 Fairfield (C) NSW $51.03 $56.09 $24.46 Canterbury-Bankstown (A) NSW $49.16 $59.38 $25.89 Central Coast (C) (NSW) NSW $46.63 $55.98 $15.45 Sunshine Coast (R) QLD $45.48 $54.03 $14.91 Blacktown (C) NSW $45.33 $55.34 $24.13 Hume (C) VIC $41.37 $47.00 $20.49 Brimbank (C) VIC $41.14 $46.53 $20.29 Casey (C) VIC $38.14 $47.48 $20.70 Greater Geelong (C) VIC $37.42 $44.11 $12.17 Ipswich (C) QLD $35.92 $41.39 $18.05 Townsville (C) QLD $35.57 $40.64 $11.22

Salisbury (C) SAU $33.28 $36.74 $16.02 Cairns (R) QLD $32.66 $36.89 $10.18 Liverpool (C) NSW $31.88 $37.85 $16.50 Onkaparinga (C) SAU $31.70 $36.11 $15.74 Unincorporated ACT ACT $30.51 $42.81 $18.67 Wollongong (C) NSW $30.40 $36.29 $10.02 Stirling (C) WAU $30.25 $36.30 $15.83 Wanneroo (C) WAU $28.81 $34.26 $14.94 Wyndham (C) VIC $28.78 $35.66 $15.55 Greater Dandenong (C) VIC $28.32 $32.70 $14.26 Playford (C) SAU $28.30 $30.33 $13.22 Cumberland (A) NSW $28.24 $34.77 $15.16

Whittlesea (C) VIC $28.10 $34.17 $14.90 Newcastle (C) NSW $26.78 $31.14 $8.59

41

Port Adelaide Enfield (C) SAU $26.31 $29.44 $12.84 Fraser Coast (R) QLD $25.63 $28.14 $5.35 Lake Macquarie (C) NSW $25.21 $30.95 $8.54

Campbelltown (C) (NSW) NSW $23.90 $28.41 $12.38 Moreland (C) VIC $23.85 $28.78 $12.55 Parramatta (C) NSW $23.52 $30.59 $13.34 Swan (C) WAU $23.16 $26.90 $11.73 Toowoomba (R) QLD $23.05 $27.66 $7.63 Penrith (C) NSW $22.82 $28.67 $12.50 Darebin (C) VIC $22.76 $27.14 $11.83 Bundaberg (R) QLD $22.53 $24.85 $4.72 Gosnells (C) WAU $22.24 $25.45 $11.10 Rockingham (C) WAU $21.39 $24.89 $10.85 Frankston (C) VIC $20.16 $24.05 $10.48 Melton (C) VIC $19.57 $23.74 $10.35

Greater Bendigo (C) VIC $19.48 $22.51 $6.21 Ballarat (C) VIC $19.31 $22.09 $6.10 Sydney (C) NSW $19.13 $26.02 $11.34 Mid-Coast (A) NSW $18.93 $21.30 $5.88 Charles Sturt (C) SAU $18.01 $21.13 $9.21 Latrobe (C) (Vic.) VIC $17.71 $19.54 $3.72 Inner West (A) NSW $17.46 $23.17 $10.10 Mackay (R) QLD $17.40 $20.61 $5.69 Rockhampton (R) QLD $16.82 $18.89 $3.59 Redland (C) QLD $16.79 $21.21 $9.25 Shoalhaven (C) NSW $16.59 $19.36 $5.34 Mandurah (C) WAU $16.36 $18.51 $8.07

Tweed (A) NSW $16.36 $18.87 $5.21 Armadale (C) WAU $16.34 $18.53 $8.08 Launceston (C) TAS $16.28 $17.90 $3.40 Mornington Peninsula (S) VIC $16.06 $20.81 $9.07 Yarra Ranges (S) VIC $15.33 $19.90 $8.68 Knox (C) VIC $15.29 $20.03 $8.73 Maribyrnong (C) VIC $15.27 $17.67 $7.71 Coffs Harbour (C) NSW $14.83 $16.78 $4.63 Cockburn (C) WAU $14.66 $17.72 $7.73 Joondalup (C) WAU $14.61 $19.26 $8.40 Monash (C) VIC $14.49 $20.38 $8.88

Melbourne (C) VIC $13.77 $18.49 $8.06 Marion (C) SAU $13.77 $16.24 $7.08 Kingston (C) (Vic.) VIC $13.71 $18.46 $8.05 Gladstone (R) QLD $13.26 $14.86 $2.82 Port Macquarie-Hastings (A) NSW $13.13 $15.31 $2.91 Yarra (C) VIC $13.00 $15.69 $6.84 Whitehorse (C) VIC $12.73 $17.92 $7.81 Moonee Valley (C) VIC $12.68 $16.32 $7.12 Banyule (C) VIC $12.04 $15.83 $6.90 Canning (C) WAU $11.63 $14.24 $6.21 Tea Tree Gully (C) SAU $11.54 $14.36 $6.26 Greater Shepparton (C) VIC $11.53 $13.27 $2.52

Georges River (A) NSW $11.44 $16.11 $7.02 Port Phillip (C) VIC $11.27 $14.47 $6.31 Gympie (R) QLD $11.17 $12.45 $3.44 Maitland (C) NSW $11.16 $13.41 $3.70 Lismore (C) NSW $11.11 $12.16 $2.31 Clarence Valley (A) NSW $11.02 $12.31 $2.34 Cessnock (C) NSW $10.97 $12.46 $3.44 Hobsons Bay (C) VIC $10.96 $13.67 $5.96 Maroondah (C) VIC $10.94 $14.34 $6.25 Glenorchy (C) TAS $10.87 $12.02 $5.24 Cardinia (S) VIC $10.82 $13.78 $6.01 Sutherland Shire (A) NSW $10.74 $17.70 $7.72

Mildura (RC) VIC $10.35 $11.79 $2.24 Bayswater (C) WAU $10.28 $12.14 $5.29 Port Stephens (A) NSW $10.27 $12.24 $3.38 Tamworth Regional (A) NSW $10.23 $11.88 $2.26

42

Darwin (C) NTE $9.91 $12.29 $5.36 Albury (C) NSW $9.91 $11.29 $2.15 Shellharbour (C) NSW $9.63 $11.61 $3.20

Greater Geraldton (C) WAU $9.53 $10.47 $1.99 Glen Eira (C) VIC $9.48 $14.08 $6.14 Northern Beaches (A) NSW $9.48 $17.84 $7.78 East Gippsland (S) VIC $9.22 $10.41 $1.98 Wagga Wagga (C) NSW $9.18 $10.95 $3.02 Boroondara (C) VIC $9.01 $14.52 $6.33 Kwinana (C) WAU $8.71 $9.77 $4.26 Randwick (C) NSW $8.69 $13.30 $5.80 Byron (A) NSW $8.44 $9.24 $1.76 West Torrens (C) SAU $8.25 $9.89 $4.31 Western Plains Regional (A) NSW $8.25 $9.66 $2.66 Manningham (C) VIC $8.24 $11.99 $5.23

Melville (C) WAU $8.00 $11.01 $4.80 Noosa (S) QLD $7.60 $9.11 $1.73 Blue Mountains (C) NSW $7.57 $9.86 $4.30 Bunbury (C) WAU $7.47 $8.26 $1.57 Alice Springs (T) NTE $7.47 $8.08 $0.86 Clarence (C) TAS $7.44 $8.99 $3.92 Ryde (C) NSW $7.42 $11.20 $4.88 Stonnington (C) VIC $7.34 $10.79 $4.70 Hornsby (A) NSW $7.29 $11.86 $5.17 Hobart (C) TAS $7.23 $8.67 $3.78 The Hills Shire (A) NSW $7.23 $12.38 $5.40 Belmont (C) WAU $7.12 $8.21 $3.58

Wellington (S) VIC $7.09 $8.27 $1.57 Kempsey (A) NSW $6.83 $7.56 $1.44 Whyalla (C) SAU $6.77 $7.26 $1.38 Lockyer Valley (R) QLD $6.72 $7.80 $2.15 Baw Baw (S) VIC $6.72 $8.13 $1.54 Eurobodalla (A) NSW $6.68 $7.69 $1.46 Ballina (A) NSW $6.49 $7.67 $1.46 South Burnett (R) QLD $6.45 $7.30 $1.39 Wodonga (C) VIC $6.34 $7.44 $2.05 Mitcham (C) SAU $6.33 $8.26 $3.60 Armidale Regional (A) NSW $6.24 $7.02 $1.33

Kalamunda (C) WAU $6.23 $7.92 $3.45 Southern Downs (R) QLD $6.20 $7.14 $1.36 Hawkesbury (C) NSW $6.18 $8.12 $3.54 Bass Coast (S) VIC $6.15 $7.05 $1.34 Cassowary Coast (R) QLD $6.14 $6.90 $1.31 Fremantle (C) WAU $5.94 $6.73 $2.93 Scenic Rim (R) QLD $5.86 $7.02 $1.94 Bathurst Regional (A) NSW $5.83 $7.02 $1.34 Victoria Park (T) WAU $5.76 $6.75 $2.94 Campaspe (S) VIC $5.73 $6.76 $1.28 East Arnhem (R) NTE $5.65 $5.80 $0.62 Devonport (C) TAS $5.61 $6.24 $1.19

Mitchell (S) VIC $5.56 $6.77 $1.29 Orange (C) NSW $5.56 $6.72 $1.86 Warrnambool (C) VIC $5.55 $6.49 $1.23 Campbelltown (C) (SA) SAU $5.50 $6.96 $3.04 Mareeba (S) QLD $5.49 $6.03 $1.67 Livingstone (S) QLD $5.49 $6.52 $1.80 Western Downs (R) QLD $5.48 $6.41 $1.22 Camden (A) NSW $5.41 $8.04 $3.51 Whitsunday (R) QLD $5.41 $6.35 $1.21 Albany (C) WAU $5.35 $6.38 $1.21 Tablelands (R) QLD $5.18 $5.83 $1.11 Busselton (C) WAU $5.12 $6.18 $1.17

Bega Valley (A) NSW $5.11 $6.05 $1.15 Mount Gambier (C) SAU $5.10 $5.80 $1.10 Murray Bridge (RC) SAU $5.09 $5.62 $1.07 Nambucca (A) NSW $5.00 $5.47 $1.51

43

Bayside (C) VIC $5.00 $10.32 $4.50 Bayside (C) VIC $5.00 $10.32 $4.50 Richmond Valley (A) NSW $4.95 $5.53 $1.05

Port Pirie City and Dists (M) SAU $4.78 $5.19 $0.99 South Perth (C) WAU $4.76 $6.01 $2.62 Somerset (R) QLD $4.58 $5.25 $2.29 West Arnhem (R) NTE $4.57 $4.65 $0.50 Burnie (C) TAS $4.47 $4.95 $0.94 Goulburn Mulwaree (A) NSW $4.43 $5.26 $1.00 Broome (S) WAU $4.39 $4.79 $0.91 Vincent (C) WAU $4.38 $5.38 $2.35 Moira (S) VIC $4.38 $5.19 $0.99 Gawler (T) SAU $4.38 $4.99 $2.18 Palmerston (C) NTE $4.26 $5.29 $2.31 Kalgoorlie/Boulder (C) WAU $4.19 $5.04 $0.96

Perth (C) WAU $4.13 $4.88 $2.13 Mundaring (S) WAU $4.13 $5.24 $2.28 Alexandrina (DC) SAU $4.12 $4.84 $0.92 Canada Bay (A) NSW $4.07 $6.96 $3.03 Brighton (M) TAS $4.06 $4.47 $1.95 Moorabool (S) VIC $4.05 $4.99 $2.18 Kingborough (M) TAS $4.01 $5.06 $2.21 Adelaide (C) SAU $3.99 $4.63 $2.02 Derby-West Kimberley (S) WAU $3.99 $4.12 $0.78 Port Augusta (C) SAU $3.99 $4.32 $0.82 Lithgow (C) NSW $3.97 $4.54 $1.25 Broken Hill (C) NSW $3.97 $4.41 $0.47

Norwood Payneham St Peters (C)

SAU $3.92 $4.96 $2.16

Wangaratta (RC) VIC $3.91 $4.72 $0.90 Roper Gulf (R) NTE $3.91 $4.02 $0.43 Queanbeyan-Palerang Regional (A)

NSW $3.91 $5.68 $1.57

Mount Barker (DC) SAU $3.89 $4.87 $0.93 MacDonnell (R) NTE $3.88 $3.97 $0.42 Nillumbik (S) VIC $3.86 $5.83 $2.54 Mount Isa (C) QLD $3.84 $4.32 $0.46 Harvey (S) WAU $3.78 $4.53 $0.86

Holdfast Bay (C) SAU $3.67 $4.72 $2.06 South Gippsland (S) VIC $3.61 $4.43 $0.84 Central Coast (M) (Tas.) TAS $3.59 $4.18 $0.79 Glenelg (S) VIC $3.55 $4.07 $0.77 Barkly (R) NTE $3.54 $3.67 $0.39 Mid-Western Regional (A) NSW $3.54 $4.23 $0.80 West Tamar (M) TAS $3.52 $4.17 $0.79 Copper Coast (DC) SAU $3.49 $3.84 $0.73 Macedon Ranges (S) VIC $3.49 $4.94 $0.94 Wollondilly (A) NSW $3.45 $4.98 $2.17 Huon Valley (M) TAS $3.23 $3.67 $1.60 Murray (S) WAU $3.23 $3.67 $1.60

Strathfield (A) NSW $3.22 $4.52 $1.97 Burwood (A) NSW $3.19 $4.35 $1.90 Inverell (A) NSW $3.18 $3.62 $0.69 Ku-ring-gai (A) NSW $3.14 $7.06 $3.08 Central Goldfields (S) VIC $3.13 $3.45 $0.66 Unley (C) SAU $3.11 $4.26 $1.86 Wingecarribee (A) NSW $3.06 $4.56 $1.26 Adelaide Hills (DC) SAU $3.03 $4.20 $1.83 Moree Plains (A) NSW $2.98 $3.31 $0.35 Waverley (A) NSW $2.97 $5.23 $2.28 Willoughby (C) NSW $2.94 $5.41 $2.36 Central Desert (R) NTE $2.92 $2.96 $0.32

Swan Hill (RC) VIC $2.91 $3.49 $0.66 Serpentine-Jarrahdale (S) WAU $2.91 $3.75 $1.64 Muswellbrook (A) NSW $2.87 $3.31 $0.63 Colac-Otway (S) VIC $2.85 $3.45 $0.66

44

Port Lincoln (C) SAU $2.84 $3.21 $0.61 Katherine (T) NTE $2.83 $3.08 $0.58 Burdekin (S) QLD $2.82 $3.28 $0.62

Central Highlands (R) (Qld) QLD $2.82 $3.65 $0.69 Singleton (A) NSW $2.80 $3.46 $0.96 Griffith (C) NSW $2.79 $3.55 $0.98 Mount Alexander (S) VIC $2.78 $3.31 $0.63 Burnside (C) SAU $2.77 $4.14 $1.81 Meander Valley (M) TAS $2.76 $3.30 $0.63 Hilltops (A) NSW $2.73 $3.24 $0.62 Bellingen (A) NSW $2.69 $3.02 $0.83 Kyogle (A) NSW $2.62 $2.82 $0.54 Northam (S) WAU $2.61 $2.89 $0.55 Horsham (RC) VIC $2.61 $3.17 $0.60 Port Hedland (T) WAU $2.58 $2.98 $0.57

Parkes (A) NSW $2.53 $2.92 $0.56 Bassendean (T) WAU $2.52 $2.93 $1.28 Charters Towers (R) QLD $2.43 $2.74 $0.52 Waratah/Wynyard (M) TAS $2.43 $2.79 $0.53 Douglas (S) QLD $2.43 $2.74 $0.52 Sorell (M) TAS $2.38 $2.78 $1.21 Barossa (DC) SAU $2.38 $3.09 $0.59 Victor Harbor (C) SAU $2.38 $2.78 $0.53 Narrabri (A) NSW $2.37 $2.73 $0.52 Walgett (A) NSW $2.36 $2.49 $0.27 Golden Plains (S) VIC $2.35 $3.00 $0.83 Southern Grampians (S) VIC $2.33 $2.77 $0.53

Hepburn (S) VIC $2.33 $2.76 $0.52 Cowra (A) NSW $2.30 $2.63 $0.50 Yarrabah (S) QLD $2.30 $2.31 $0.25 West Daly (R) NTE $2.29 $2.34 $0.25 North Sydney (A) NSW $2.25 $4.53 $1.98 Derwent Valley (M) TAS $2.24 $2.49 $1.09 Northern Midlands (M) TAS $2.23 $2.58 $0.49 Snowy Monaro Regional (A) NSW $2.23 $2.82 $0.54 Berri and Barmera (DC) SAU $2.22 $2.49 $0.47 Glen Innes Severn (A) NSW $2.21 $2.43 $0.46 Benalla (RC) VIC $2.21 $2.59 $0.49

Collie (S) WAU $2.20 $2.41 $0.46 Prospect (C) SAU $2.19 $2.79 $1.22 Capel (S) WAU $2.19 $2.69 $0.51 Surf Coast (S) VIC $2.19 $3.13 $0.59 Gunnedah (A) NSW $2.16 $2.50 $0.47 Wyndham-East Kimberley (S) WAU $2.15 $2.31 $0.25 Tiwi Islands (R) NTE $2.08 $2.10 $0.23 Torres Strait Island (R) QLD $2.05 $2.14 $0.23 Wattle Range (DC) SAU $2.04 $2.35 $0.45 Renmark Paringa (DC) SAU $2.00 $2.25 $0.43 Litchfield (M) NTE $2.00 $2.74 $1.20 Mid Murray (DC) SAU $1.99 $2.21 $0.42

Corangamite (S) VIC $1.99 $2.44 $0.46 Hinchinbrook (S) QLD $1.94 $2.23 $0.42 Ararat (RC) VIC $1.94 $2.26 $0.43 Karratha (C) WAU $1.94 $2.59 $0.49 Yorke Peninsula (DC) SAU $1.93 $2.23 $0.42 Snowy Valleys (A) NSW $1.92 $2.33 $0.44 Halls Creek (S) WAU $1.90 $1.95 $0.21 Augusta-Margaret River (S) WAU $1.90 $2.32 $0.44 Northern Grampians (S) VIC $1.89 $2.20 $0.42 Break O'Day (M) TAS $1.88 $2.01 $0.22 George Town (M) TAS $1.87 $2.03 $0.39 Dardanup (S) WAU $1.85 $2.25 $0.43

Woollahra (A) NSW $1.82 $3.66 $1.60 Moyne (S) VIC $1.80 $2.28 $0.43 Warrumbungle Shire (A) NSW $1.79 $2.03 $0.39 Subiaco (C) WAU $1.78 $2.28 $0.99

45

Esperance (S) WAU $1.77 $2.17 $0.41 North Burnett (R) QLD $1.74 $2.03 $0.39 Murrindindi (S) VIC $1.74 $2.14 $0.41

Tenterfield (A) NSW $1.72 $1.88 $0.36 Gundagai (A) NSW $1.71 $2.01 $0.38 Indigo (S) VIC $1.70 $2.17 $0.60 Federation (A) NSW $1.67 $2.02 $0.38 Light (RegC) SAU $1.67 $2.10 $0.40 Cook (S) QLD $1.67 $1.76 $0.19 Loxton Waikerie (DC) SAU $1.66 $1.98 $0.38 Leeton (A) NSW $1.60 $1.91 $0.53 Latrobe (M) (Tas.) TAS $1.59 $1.89 $0.36 Upper Hunter Shire (A) NSW $1.58 $1.99 $0.38 Kiama (A) NSW $1.55 $2.22 $0.42 Carnarvon (S) WAU $1.54 $1.66 $0.18

Gannawarra (S) VIC $1.52 $1.81 $0.34 Liverpool Plains (A) NSW $1.51 $1.72 $0.33 East Pilbara (S) WAU $1.47 $1.77 $0.34 Banana (S) QLD $1.46 $1.88 $0.36 Manjimup (S) WAU $1.45 $1.70 $0.32 Loddon (S) VIC $1.44 $1.63 $0.31 Wentworth (A) NSW $1.42 $1.60 $0.30 Maranoa (R) QLD $1.41 $1.78 $0.34 Cambridge (T) WAU $1.39 $2.25 $0.98 Strathbogie (S) VIC $1.37 $1.66 $0.32 West Coast (M) TAS $1.34 $1.43 $0.15 Mallala (DC) SAU $1.33 $1.58 $0.30

Alpine (S) VIC $1.30 $1.66 $0.32 Forbes (A) NSW $1.29 $1.57 $0.30 Pyrenees (S) VIC $1.29 $1.48 $0.28 Dorset (M) TAS $1.28 $1.45 $0.28 Ngaanyatjarraku (S) WAU $1.27 $1.28 $0.14 Unincorporated NT NTE $1.26 $1.46 $0.16 Edward River (A) NSW $1.24 $1.49 $0.28 Dungog (A) NSW $1.23 $1.48 $0.28 Palm Island (S) QLD $1.21 $1.26 $0.13 Kentish (M) TAS $1.21 $1.37 $0.26 Isaac (R) QLD $1.20 $1.84 $0.35

Lane Cove (A) NSW $1.19 $2.40 $1.05 Goondiwindi (R) QLD $1.19 $1.50 $0.28 Coonamble (A) NSW $1.19 $1.28 $0.24 Narromine (A) NSW $1.18 $1.36 $0.26 Murray River (A) NSW $1.16 $1.51 $0.29 Aurukun (S) QLD $1.16 $1.17 $0.22 Wakefield (DC) SAU $1.15 $1.34 $0.25 Berrigan (A) NSW $1.15 $1.39 $0.26 Cabonne (A) NSW $1.13 $1.53 $0.29 Circular Head (M) TAS $1.11 $1.34 $0.14 Victoria Daly (R) NTE $1.11 $1.18 $0.13 Anangu Pitjantjatjara (AC) SAU $1.11 $1.15 $0.12

Clare and Gilbert Valleys (DC) SAU $1.10 $1.36 $0.26 Greater Hume Shire (A) NSW $1.09 $1.39 $0.27 Yass Valley (A) NSW $1.05 $1.56 $0.43 Lachlan (A) NSW $1.04 $1.21 $0.13 Unincorporated SA SAU $1.04 $1.12 $0.12 Southern Midlands (M) TAS $1.04 $1.20 $0.23 Nedlands (C) WAU $1.03 $1.72 $0.75 The Coorong (DC) SAU $1.03 $1.17 $0.22 Yarriambiack (S) VIC $1.02 $1.21 $0.23 Narrandera (A) NSW $1.01 $1.17 $0.32 Ceduna (DC) SAU $1.00 $1.08 $0.21 Donnybrook-Balingup (S) WAU $0.99 $1.15 $0.22

Northern Peninsula Area (R) QLD $0.99 $1.06 $0.11 Denmark (S) WAU $0.96 $1.12 $0.21 Woorabinda (S) QLD $0.95 $0.95 $0.10 Yankalilla (DC) SAU $0.95 $1.09 $0.21

46

Katanning (S) WAU $0.94 $1.04 $0.20 Plantagenet (S) WAU $0.93 $1.07 $0.20 Naracoorte and Lucindale (DC) SAU $0.91 $1.15 $0.22

Mansfield (S) VIC $0.90 $1.16 $0.22 Narrogin (S) WAU $0.90 $1.03 $0.20 Waroona (S) WAU $0.89 $1.00 $0.19 Cherbourg (S) QLD $0.89 $0.90 $0.17 Torres (S) QLD $0.87 $0.96 $0.10 Blayney (A) NSW $0.84 $1.05 $0.20 Coober Pedy (DC) SAU $0.82 $0.86 $0.09 Carpentaria (S) QLD $0.82 $0.86 $0.09 Gilgandra (A) NSW $0.81 $0.92 $0.10 Hindmarsh (S) VIC $0.81 $0.97 $0.18 Uralla (A) NSW $0.80 $0.98 $0.19 Doomadgee (S) QLD $0.79 $0.81 $0.09

Toodyay (S) WAU $0.78 $0.90 $0.17 Buloke (S) VIC $0.78 $0.95 $0.18 Mosman Park (T) WAU $0.77 $1.04 $0.45 Towong (S) VIC $0.77 $0.94 $0.18 Kowanyama (S) QLD $0.77 $0.77 $0.08 Bridgetown-Greenbushes (S) WAU $0.76 $0.89 $0.17 Grant (DC) SAU $0.76 $1.00 $0.19 Mornington (S) QLD $0.76 $0.77 $0.08 Temora (A) NSW $0.73 $0.91 $0.17 Goyder (DC) SAU $0.73 $0.84 $0.16 Gingin (S) WAU $0.70 $0.85 $0.16 Kangaroo Island (DC) SAU $0.70 $0.84 $0.09

Hope Vale (S) QLD $0.70 $0.71 $0.08 Coolgardie (S) WAU $0.69 $0.78 $0.15 Gwydir (A) NSW $0.69 $0.83 $0.16 Walkerville (M) SAU $0.69 $0.92 $0.40 Balonne (S) QLD $0.68 $0.80 $0.22 Northampton (S) WAU $0.68 $0.76 $0.15 Murweh (S) QLD $0.67 $0.79 $0.08 Glamorgan/Spring Bay (M) TAS $0.67 $0.79 $0.15 Junee (A) NSW $0.66 $0.85 $0.16 Central Darling (A) NSW $0.65 $0.69 $0.07 Bourke (A) NSW $0.65 $0.71 $0.08

Upper Lachlan Shire (A) NSW $0.64 $0.87 $0.17 Bland (A) NSW $0.64 $0.81 $0.15 Mosman (A) NSW $0.63 $1.59 $0.69 York (S) WAU $0.63 $0.73 $0.14 Peterborough (DC) SAU $0.63 $0.66 $0.13 East Fremantle (T) WAU $0.62 $0.86 $0.37 Meekatharra (S) WAU $0.61 $0.63 $0.07 Northern Areas (DC) SAU $0.60 $0.73 $0.08 Lower Eyre Peninsula (DC) SAU $0.60 $0.76 $0.15 Warren (A) NSW $0.58 $0.65 $0.07 Claremont (T) WAU $0.57 $0.89 $0.39 Tatiara (DC) SAU $0.56 $0.76 $0.14

Brewarrina (A) NSW $0.55 $0.59 $0.06 Oberon (A) NSW $0.55 $0.71 $0.20 Coolamon (A) NSW $0.52 $0.65 $0.12 Cobar (A) NSW $0.52 $0.66 $0.07 Irwin (S) WAU $0.52 $0.62 $0.12 Merredin (S) WAU $0.52 $0.61 $0.12 Cloncurry (S) QLD $0.51 $0.59 $0.06 Pormpuraaw (S) QLD $0.50 $0.51 $0.05 Weddin (A) NSW $0.49 $0.59 $0.11 Paroo (S) QLD $0.48 $0.52 $0.06 Chittering (S) WAU $0.48 $0.65 $0.12 Hunters Hill (A) NSW $0.48 $0.93 $0.41

Central Highlands (M) (Tas.) TAS $0.47 $0.53 $0.06 West Wimmera (S) VIC $0.47 $0.58 $0.11 Barunga West (DC) SAU $0.46 $0.53 $0.10 Napranum (S) QLD $0.46 $0.47 $0.05

47

Bogan (A) NSW $0.44 $0.52 $0.10 Moora (S) WAU $0.43 $0.50 $0.09 Tasman (M) TAS $0.42 $0.49 $0.09

Mount Remarkable (DC) SAU $0.41 $0.49 $0.09 Hay (A) NSW $0.40 $0.49 $0.09 Dandaragan (S) WAU $0.40 $0.49 $0.09 Laverton (S) WAU $0.39 $0.42 $0.04 Ashburton (S) WAU $0.39 $0.80 $0.15 Coomalie (S) NTE $0.39 $0.42 $0.08 Lockhart River (S) QLD $0.38 $0.39 $0.04 Walcha (A) NSW $0.37 $0.46 $0.09 Leonora (S) WAU $0.36 $0.40 $0.04 Lockhart (A) NSW $0.34 $0.44 $0.08 Mount Magnet (S) WAU $0.34 $0.35 $0.07 Murrumbidgee (A) NSW $0.33 $0.45 $0.09

Wagin (S) WAU $0.32 $0.37 $0.07 Nannup (S) WAU $0.32 $0.35 $0.07 Longreach (R) QLD $0.32 $0.43 $0.05 Tumby Bay (DC) SAU $0.32 $0.39 $0.07 Streaky Bay (DC) SAU $0.31 $0.37 $0.07 Cottesloe (T) WAU $0.31 $0.56 $0.24 Wujal Wujal (S) QLD $0.30 $0.30 $0.03 Carrathool (A) NSW $0.29 $0.37 $0.07 Wiluna (S) WAU $0.28 $0.30 $0.03 Flinders Ranges (DC) SAU $0.28 $0.33 $0.06 Pingelly (S) WAU $0.27 $0.30 $0.06 Exmouth (S) WAU $0.27 $0.35 $0.04

Beverley (S) WAU $0.26 $0.31 $0.06 Dundas (S) WAU $0.26 $0.28 $0.03 Queenscliffe (B) VIC $0.26 $0.34 $0.10 Barcaldine (R) QLD $0.25 $0.34 $0.04 Kingston (DC) (SA) SAU $0.23 $0.30 $0.06 Quairading (S) WAU $0.23 $0.25 $0.05 Belyuen (S) NTE $0.23 $0.23 $0.02 Broomehill-Tambellup (S) WAU $0.22 $0.25 $0.05 Gnowangerup (S) WAU $0.22 $0.25 $0.05 Wongan-Ballidu (S) WAU $0.21 $0.25 $0.05 Boddington (S) WAU $0.21 $0.26 $0.05

Flinders (S) (Qld) QLD $0.21 $0.25 $0.03 Blackall-Tambo (R) QLD $0.21 $0.26 $0.03 Balranald (A) NSW $0.21 $0.27 $0.05 Kojonup (S) WAU $0.21 $0.26 $0.03 Cunderdin (S) WAU $0.20 $0.24 $0.03 Southern Mallee (DC) SAU $0.20 $0.26 $0.05 Boyup Brook (S) WAU $0.20 $0.25 $0.05 Goomalling (S) WAU $0.20 $0.23 $0.04 Ravensthorpe (S) WAU $0.20 $0.25 $0.05 Chapman Valley (S) WAU $0.20 $0.24 $0.05 Yilgarn (S) WAU $0.19 $0.22 $0.04 Kellerberrin (S) WAU $0.19 $0.22 $0.04

Elliston (DC) SAU $0.18 $0.21 $0.04 Roxby Downs (M) SAU $0.18 $0.30 $0.03 Yalgoo (S) WAU $0.18 $0.18 $0.03 Weipa (T) QLD $0.18 $0.30 $0.03 Karoonda East Murray (DC) SAU $0.17 $0.20 $0.04 Flinders (M) (Tas.) TAS $0.16 $0.19 $0.02 Coorow (S) WAU $0.16 $0.19 $0.04 Brookton (S) WAU $0.15 $0.18 $0.03 Franklin Harbour (DC) SAU $0.14 $0.18 $0.03 Cleve (DC) SAU $0.14 $0.19 $0.04 Corrigin (S) WAU $0.14 $0.17 $0.03 King Island (M) TAS $0.14 $0.19 $0.02

Robe (DC) SAU $0.14 $0.18 $0.03 Shark Bay (S) WAU $0.13 $0.15 $0.02 Carnamah (S) WAU $0.13 $0.14 $0.03 Morawa (S) WAU $0.13 $0.15 $0.03

48

Winton (S) QLD $0.12 $0.15 $0.02 Kondinin (S) WAU $0.12 $0.14 $0.02 Dalwallinu (S) WAU $0.12 $0.16 $0.02

Cranbrook (S) WAU $0.11 $0.14 $0.03 West Arthur (S) WAU $0.11 $0.13 $0.02 Bruce Rock (S) WAU $0.11 $0.13 $0.03 Burke (S) QLD $0.10 $0.11 $0.01 Dumbleyung (S) WAU $0.10 $0.12 $0.02 Cuballing (S) WAU $0.10 $0.12 $0.02 Wyalkatchem (S) WAU $0.10 $0.11 $0.02 Wudinna (DC) SAU $0.10 $0.14 $0.03 Menzies (S) WAU $0.09 $0.11 $0.01 Unincorporated NSW NSW $0.09 $0.13 $0.01 Richmond (S) QLD $0.09 $0.11 $0.01 Croydon (S) QLD $0.09 $0.10 $0.01

Orroroo/Carrieton (DC) SAU $0.09 $0.12 $0.01 Dowerin (S) WAU $0.09 $0.11 $0.02 Kulin (S) WAU $0.09 $0.11 $0.02 Trayning (S) WAU $0.09 $0.09 $0.01 Wickepin (S) WAU $0.09 $0.11 $0.01 Etheridge (S) QLD $0.08 $0.10 $0.01 Tammin (S) WAU $0.08 $0.09 $0.02 Mingenew (S) WAU $0.07 $0.09 $0.02 Narembeen (S) WAU $0.07 $0.10 $0.01 Lake Grace (S) WAU $0.07 $0.11 $0.01 Three Springs (S) WAU $0.07 $0.09 $0.02 Wagait (S) NTE $0.07 $0.09 $0.01

Quilpie (S) QLD $0.07 $0.09 $0.01 Cue (S) WAU $0.07 $0.07 $0.01 Boulia (S) QLD $0.06 $0.08 $0.01 Koorda (S) WAU $0.06 $0.08 $0.01 Woodanilling (S) WAU $0.06 $0.07 $0.01 Upper Gascoyne (S) WAU $0.06 $0.07 $0.01 Kimba (DC) SAU $0.06 $0.09 $0.02 Williams (S) WAU $0.05 $0.08 $0.02 Nungarin (S) WAU $0.05 $0.06 $0.01 Peppermint Grove (S) WAU $0.05 $0.10 $0.05 Jerramungup (S) WAU $0.05 $0.08 $0.02

Victoria Plains (S) WAU $0.05 $0.08 $0.01 Wandering (S) WAU $0.05 $0.06 $0.01 McKinlay (S) QLD $0.05 $0.07 $0.01 Bulloo (S) QLD $0.04 $0.05 $0.01 Mukinbudin (S) WAU $0.04 $0.05 $0.01 Westonia (S) WAU $0.04 $0.04 $0.00 Unincorporated Vic VIC $0.04 $0.06 $0.01 Mount Marshall (S) WAU $0.03 $0.05 $0.01 Diamantina (S) QLD $0.03 $0.04 $0.00 Barcoo (S) QLD $0.03 $0.03 $0.00 Kent (S) WAU $0.02 $0.04 $0.00 Perenjori (S) WAU $0.02 $0.04 $0.01

Sandstone (S) WAU $0.02 $0.02 $0.00 Mapoon (S) QLD $0.00 $0.01 $0.00 Maralinga Tjarutja (AC) SAU $0.00 $0.00 $0.00 Murchison (S) WAU $0.00 $0.01 $0.00


Table A.3: Outcomes for key economic indicators for each State and Territory, change in per person value,

2018-19

Region Disposable income Consumption Economic output

New South Wales $114 $140 $47 Victoria $121 $145 $53 Queensland $150 $175 $56 South Australia $166 $191 $70

49

Western Australia $146 $171 $64 Tasmania $182 $206 $60 Northern Territory $236 $258 $55

Australian Capital Territory

$73 $101 $43


Table A.4: Outcomes for key economic indicators for each State and Territory, Total increase ($m), 2018-19

Region Disposable income Consumption Economic output

New South Wales $905 $1,128 $383 Victoria $773 $952 $356 Queensland $748 $883 $286 South Australia $288 $333 $123 Western Australia $377 $447 $168 Tasmania $96 $109 $32 Northern Territory $58 $64 $14

Australian Capital Territory

$31 $43 $19


50

Appendix B: The Horizon

Model

B.1. The Horizon Model

The Horizon model produces detailed estimates of the impact of various scenarios on the Australian

economy. It underpins the macroeconomic results in this report.

B.1.1. What is the Horizon model?

The Horizon model is a large scale structural macro econometric model of the Australian economy.

Like all economic models, the Horizon model represents the complex forces at play in the real world

economy using a simplified framework of relationships and assumptions.

While no model is perfect when it comes to complex scenario analysis, by combining both economic

theory and real world data, models give their users the best information from which to start exploring

a given economic scenario.

It is important to note that by modelling outcomes for the entire Australian economy, the Horizon

model accounts for important feedbacks in the economy, such as changes in interest rates in response

to a downturn, and in the impacts on business – such as reductions in wage costs in tough trading

conditions.

A comprehensive model also ensures that outcomes for all industries and States are consistent with

each other and with the economy as a whole. These are important outcomes that other approaches to

scenario analysis can miss.

The core of the Horizon model looks at what has happened in the past to better understand potential

futures. It estimates a detailed set of equations to represent the key relationships in the economy and

predict future outcomes.

In one sense the model can be thought of as a detailed set of equations and the data required to solve

them. Those equations reflect the deep expertise and experience of Deloitte Access Economics, and

are constructed based on a combination of economic theory and the historical experience of the

Australian economy.

Each of these equations has associated parameters – values that measure the strength of the various

relationships contained in that equation. These are estimated by applying econometric techniques to

the underlying data to ensure the relationships match up as closely as possible with past experience.

Each time Deloitte Horizon is updated the data underpinning the Horizon model is refreshed, and the

parameters of the model equations are re-estimated. This produces new baseline forecasts and

different relationships between the variables in the model, which can in turn alter outcomes under

alternative scenarios.

In simulating the impacts of the intervention described in this report a specific set of scenario

assumptions have been input into the Horizon model to forecast an alternative path for the economy.

B.1.2. How does the model work?

Australia’s economy is made up of a complex set of relationships between consumers, businesses,

financial markets and governments. While there is no way for any analysis to incorporate all the

complexity of a real world economy, the Horizon model adopts a macroeconomic framework that

simplifies the most important features of the economy into a form that’s suitable for scenario analysis

and forecasting.

51

At its heart, that framework is built on interactions between:

• Three types of agents – businesses, governments, and households.

• Three types of markets – labour markets, product markets and financial markets – in which those agents interact with each other, and with the global economy.

At the most basic level the model reflects a circular flow of funds around the economy.

To take one example, households purchase the goods made by businesses in the product market using

the income earned from those same businesses in the labour market.

Both sides of each such transaction are recognised and the resulting funds feed into a number of other

transactions in the economy.

Representing the circular nature of economic flows is an important feature of the model. It requires a

detailed set of equations that are solved simultaneously, rather than sequentially.

In such a framework, the short run path for the economy is largely driven by fluctuations in

components of demand – consumption, investment, net government spending, exports and imports.

In the longer term, economic output is more closely tied to the supply side of the economy. As Federal

Treasury has long noted the ‘Three P’s’ of population, participation and productivity are at the heart of

the growth potential of the Australian economy over time.

Population projections are determined exogenously using Deloitte Access Economics’ detailed

modelling of the Australian population. Productivity forms an important component of the scenario

capability of the model – particularly in relation to the adoption of new technologies – with resulting

impacts on long term output and employment by industry sector.

Movements in the overall stock of capital also play a role, linking short term impacts on investment to

the path of longer term economic growth.

B.1.2.1. Economic agents

The Horizon model represents the behaviour of households, businesses and governments which

collectively make up the economy as a whole.

Businesses employ workers, use business assets and purchase intermediate goods (supplies,

services and raw materials from Australian or international sources) to produce goods and

services.

All three levels of government in Australia – Federal, State and Local – are included together in the

model as a single government sector. Governments spend money on goods and services (such as

national defence and health care) invest in new public infrastructure, collect taxes, borrow on

financial markets and set monetary policy.

Households work for businesses, buy goods and services, own all business and financial assets and

pay taxes. Household consumption is influenced by household income, private wealth, dwelling

stocks, prices, public sector borrowing requirements, rental prices and world prices. Preferences in

relation to the timing of consumption also play a role. Rental consumption, including imputed

rental consumption for households who own their own home, is modelled separately from non-

rental consumption.

B.1.2.2. Markets

Markets are where households, businesses and governments interact. Supply and demand interact in

markets to determine economic outcomes.

The labour market is where households look for work and businesses hire employees. The

interaction of the demand and supply of workers determines the unemployment rate and the wage

rate. Job vacancies and the difficulty of finding work – particularly for the long term unemployed –

are included in the model.

52

The goods market is perhaps the most familiar of the markets within the modelling framework.

Here the spending decisions of households (demand) are reconciled with the output decisions of

businesses (supply). In the model, the prices of goods and services are industry-specific, and

respond differently to pressures in demand, wage and import prices across the different modelled

industries. Incorporating import prices in the determination of expenditure prices also ensures

that changes in the exchange rate are accounted for, resulting in changes in relative expenditure

prices and in the composition of domestic demand. Imports will be driven by domestic demand in

the short run, with import prices having some influence in the medium to long run.

Financial markets also play an important role within the model. Here interest rates and the

exchange rate are determined mostly by a combination of world financial markets – where

Australia has to take what it can get – the actions of the Reserve Bank of Australia in keeping

inflation within its target band and the value of Australia’s imports and exports.

B.1.2.3. Industry detail

The core structure of the model contains the major industries based on the latest Australian and New

Zealand Standard Industrial Classification (ANZSIC 2006) and uses a bottom-up approach.

11 major industry groupings are modelled in full, with unique production functions, capital stocks

output prices and

Additional industry detail is available based on a ‘top down’ framework – one that splits out totals

estimated within the model’s core into more detailed industries based on relationships that are known

or observed in the data.

That modelling is complex, but in essence the model compares movements in output and employment

in each sub-industry with movements in national spending aggregates – business investment,

consumer spending, imports and so on. The resulting relationships then drive the performance of the

various sub-industries in the model.

B.1.3. Where does the data come from?

The Horizon model is both large and complex. In analysing any given scenario, it draws on a wealth of

data relating to the Australian economy and business conditions, as well as information about the

various changes expected under the scenario in question.

Information on the scenario specific inputs used in this analysis is provided in Chapter 2.

Inputs to the model itself are largely drawn from publicly available data issued by third parties, with

the bulk of the relevant datasets produced by the Australian Bureau of Statistics (ABS).

While the full list of included datasets is too long to include here, major data sources include:

The Australian System of National Accounts (ABS catalogue numbers 5204.0, 5206.0):

– A vast majority of the data needed to form the structural model of the Australian economy is

sourced from the national accounts.

– This dataset covers both government and private sector inputs.

– It includes data relating to output, consumption, investment, imports and exports, including

State and industry detail.

– Important price deflators are also drawn from the national accounts.

Balance of payments and international investment position (ABS catalogue number 5302.0):

– The data from here forms the structure of the model’s external accounts.

– Key variables include the nominal trade balance, net income balance and net unrequited

transfers.

– Measures of the current account and capital account are also available.

Labour force survey (ABS catalogue number 6202.0):

53

– Forms the primary source for labour market related variables.

– This includes employment, unemployment, labour force participation and hours worked.

– Many other related measures are also available.

Consumer Price Index (ABS catalogue number 6401.0):

– This data is used to introduce domestic prices and price expectations into the model.

– The Consumer Price Index information is available by capital city and across a number of

categories of goods and services.

– Information on underlying and headline inflation, as well as results for the volatile items that

make up the difference, is also available.

Wage data is drawn from a variety of sources:

– Wage Price Index (ABS catalogue number 6345.0)

– Average Weekly Earnings (ABS catalogue number 6302.0)

– Average Compensation of Employees (ABS catalogue number 5206.0)

– Some wage information at the State and industry level is synthesised by Deloitte Access

Economics on the basis of proprietary modelling.

Financial market variables are sourced from the Reserve Bank of Australia’s statistical database,

these include (not limited to):

– 90 day bank bill rates

– 10 year government bond rates

– Foreign interest rates

– Foreign exchange rates

Government sector variables are informed by a variety of publicly available sources:

– ABS Government Finance Statistics (ABS catalogue number 5512.0)

– Department of Human Services

– Australian Tax Office

– State and Federal Budget information.

Global variables rely on a variety of sources:

– Thomson Reuters Datastream and Eikon

– FRED – the Federal Reserve Bank of St Louis Economic Database

– International Monetary Fund

– World Bank

– Organisation of Economic Co-operation and Development.

Detailed industry specific variables largely rely on the Australian Industry publication (ABS

catalogue number 8155.0):

– This includes measures of profits, revenues and costs, including wage costs

– Employment and activity are also drawn from this publication at the sub-industry level.

– Interest costs and debt stocks are based on ATO Taxstats data

54

Appendix C: Regional CGE

modelling methodology

C.1. Computable general equilibrium modelling

The project utilises the Deloitte Access Economics’ – Regional General Equilibrium Model (DAE-RGEM).

DAE-RGEM is a large scale, dynamic, multi-region, multi-commodity CGE model of the world economy

with bottom-up modelling of Australian regions. DAE-RGEM encompasses all economic activity in an

economy – including production, consumption, employment, taxes and trade – and the inter-linkages

between them. For this project, the model has been customised to explicitly identify the parts of the

Australian economy where the event will take place, including some of its unique economic

characteristics.

Figure 2.1 is a stylised diagram showing the circular flow of income and spending that occurs in

DAE-RGEM. To meet demand for products, firms purchase inputs from other producers and hire factors

of production (labour and capital). Producers pay wages and rent (factor income) which accrue to

households. Households spend their income on goods and services, pay taxes and put some away for

savings. The government uses tax revenue to purchase goods and services, while savings are used by

investors to buy capital goods to facilitate future consumption. As DAE-RGEM is an open economy

model, it also includes trade flows with other regions, interstate and foreign countries.

Figure C.1: The components of DAE-RGEM and their relationships


The model compares a baseline scenario where the proposed increase in Australian Government

allowance payments does not occur with a counterfactual scenario where the payment increase does

occur. A set of inputs that stylise these alternative scenarios, so that the economic impact of the event

can be projected have been developed.

55

Limitation of our work

General use restriction

This report is prepared solely for the use of the Australian Council of Social Service. This report is not

intended to and should not be used or relied upon by anyone else and we accept no duty of care to

any other person or entity. The report has been prepared for the purpose set out in our engagement

letter dated 29 June 2018. As noted in our engagement letter, we understand that, as part of its Raise

the Rate campaign, ACOSS may publicly release this report. You should not refer to or use our name

or the advice for any other purpose.

56

Deloitte Access Economics

ACN: 149 633 116

8 Brindabella Circuit

Brindabella Business Park

Canberra Airport ACT 2609

Tel: +61 2 6263 7000

Fax: +61 2 6263 7004

Deloitte Access Economics is Australia’s pre-eminent economics advisory practice and a member of Deloitte's global economics

group. For more information, please visit our website

www.deloitte.com/au/deloitte-access-economics

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network

of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a

detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

The entity named herein is a legally separate and independent entity. In providing this document, the author only acts in the

named capacity and does not act in any other capacity. Nothing in this document, nor any related attachments or

communications or services, have any capacity to bind any other entity under the ‘Deloitte’ network of member firms (including

those operating in Australia).

About Deloitte

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries.

With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-

quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte's

approximately 260,000 professionals are committed to becoming the standard of excellence.

About Deloitte Australia

In Australia, the member firm is the Australian partnership of Deloitte Touche Tohmatsu. As one of Australia’s leading

professional services firms. Deloitte Touche Tohmatsu and its affiliates provide audit, tax, consulting, and financial advisory

services through approximately 7,000 people across the country. Focused on the creation of value and growth, and known as an

employer of choice for innovative human resources programs, we are dedicated to helping our clients and our people excel. For

more information, please visit our web site at www.deloitte.com.au.


Member of Deloitte Touche Tohmatsu Limited

© 2018 Deloitte Access Economics Pty Ltd

Analysis of the impact of raising benefit rates · Analysis of the impact of raising benefit rates...

Documents

Transcript of Analysis of the impact of raising benefit rates · Analysis of the impact of raising benefit rates...